REUTERS / Dado Ruvic / Illustration
Robinhood’s shares rose up to 29% on Tuesday to a record post-IPO high of $ 48.59 as long-term investors like Cathie Woods Ark Invest begin to build a position in the fintech platform.
Robinhood made a troubled debut last week, with stocks falling as much as 12% from their IPO price of $ 38 per share. The IPO was unique in that Robinhood added shares to its user base, allowing retail investors to get in straight away. This access is usually reserved for institutional investors and their customers.
While only 1% of Robinhood’s users were directly involved in the IPO, other investors appear more optimistic about the online trading app’s long-term prospects.
Ark Invest has built a nearly $ 250 million stake in Robinhood since going public last week. The company owns more than 6 million shares of Robinhood through the ETFs Disruptive Innovation, Next Generation Internet and Fintech Innovation from Ark Invest.
But not all are optimistic about Robinhood, with New Constructs’ David Trainer arguing that Robinhood is worth no more than $ 9 billion, which is more than 75% downside potential from current levels.
“The growing regulatory risk facing Robinhood worries us that the public may see Robinhood’s stated goal of ‘democratizing investing’ as a ploy to lure them into speculative trading and gambling, from which Robinhood benefits more than the individual investor, “Trainer said last month in a report.