Robinhood Markets Inc., the trading app synonymous with hot stocks, got a cold reception from investors in its own stock-market debut.
The investing app tumbled in its highly anticipated trading debut Thursday, closing 8.4% below its initial public offering price. Robinhood stock opened at $38, matching the IPO price, and quickly fell more than 10%. The stock later climbed to approach the IPO price before falling again in the final hour of trading to close at $34.82.
It was a disappointing debut for the company that brought the markets to the masses. Robinhood and its bankers tried to avoid a poor first-day performance by pricing shares at the bottom of its targeted range at a value of about $32 billion. A successful first day was all the more important because Robinhood sold a big chunk of its shares to its own customers.
Breaking with a Wall Street convention of giving individual investors only a minuscule slice of hot IPOs, Robinhood sold between 20% and 25% of its offering to its customers, according to people familiar with the matter.
“One of our company values is ‘participation is power,’” Chief Executive Vlad Tenev said in an interview. “It didn’t seem right for us that IPOs had typically been reserved for the top 1%.”
