Robinhood IPO meets soft demand on Wall Street, Redditors are not as interested
- Robinhood prices its initial public offering at the low end of the price range, $38 each.
- There is negativity on stock investment subreddits since the commission-free trading exchange platform was engulfed in scandals in early 2021.
- On 28 July, the exchange announced that regulators are investigating CEO Vlad Tenev.
Crypto traders are looking forward to Robinhood’s roll-out of a new feature promising to protect investors from volatility. Institutional investors were wary and sat out of the IPO.
Robinhood tests feature to protect traders from volatility while facing a regulatory probe
A day before launching its IPO, Robinhood, the commission-free trading and investing platform, revealed that CEO Vlad Tenev is under investigation by the Financial Industry Regulatory Authority (FINRA). Regulatory authorities are scrutinizing Tenev to confirm whether he is licensed by FINRA.
While the probe continues, Robinhood’s IPO is now complete, and the exchange has raised $1.9 billion from investors. It’s important to note that when the eight-year-old firm had announced its public offering, subreddits including r/WallStreetBets and r/StockMarket were encouraging investors to ignore it.
A post on r/Superstonk, a subreddit with 543,000 members, reads,
Robinhood IPO is set to be on the market on Thursday. DO NOT GO NEAR IT!!!
The negativity around the exchange started in January 2021 when Robinhood got entangled in scandalous meme stock rallies. The company earned a reputation as a ‘Gateway to meme stocks’ when its app halted trading in specific stocks, including GameStop, at the height of their price rally, leaving users infuriated and attracting attention from regulators.
Alexandria Ocasio-Cortez, US Representative, tweeted,
This is unacceptable.
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
The exchanges’ brush-off with regulators raised flags for institutional investors who stayed on the sidelines during the IPO for fear of a further regulatory crackdown.
To win back investors’ trust and interest in its platform, the zero-fee trading exchange is reportedly working on a new feature to protect traders from crypto price volatility. It is labeled ‘price volatility protection.’ A Bloomberg report based on Steve Moser, an iOS developer’s analysis of new code in a beta version of Robinhood’s app, states that it contains a message:
To protect your orders against price volatility, we may sometimes skip your recurring orders or buy less than your chosen amount.
Investors are considering Robinhood’s long-anticipated IPO success a watershed moment for the fintech industry and crypto, as it joins the league of several crypto companies that are now public, like Coinbase Global Inc. However, the zero-commission exchange is not out of regulatory crosshairs.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
