Robinhood (HOOD) made its IPO debut on Nasdaq Thursday morning, marking a pretty historic moment for millennials and Gen Zers who have used the green feathered app to become more acquainted with investing. Although the zero-commission stock trading platform is a hit among younger demographics, the conventional investor wasn’t too excited about the company going public.
The price opened at $38 a share, climbing upward to $40.22 before dipping nearly 13% to $34.85 by closing. Initially, the valuation was at $32 billion but dropped to a value of $29 billion.
Founded by Baiju Bhatt and Vlad Tenev, Robinhood serves as an accessible pathway into the world of trading for those who wouldn’t have access otherwise, in a mission to “democratize investing.” The company utilizes a business model called “Payment for Order Flow (PFOF)” where trades are delegated to third-party entities on the behalf of Robinhood users. This method of earning revenues is considered controversial given that it presents a conflict of interest for Robinhood that some perceive can lead to the company compromising its clients’ interests.
The debacle with GameStop that occurred earlier in 2021 comes to mind in which Robinhood halted trading of the stock during a disruptive war between Wall Street short sellers and inexperienced, but ambitious day traders. Coupled with past customer service issues and lockouts, the disappointing initial public offering could have been foreseeable by those who distrust the platform. Robinhood plans to fix these issues and ensures its clients will have even greater flexibility to use the app in a variety of ways.
“Over time, we want to be the single money app, the most trusted and most culturally relevant money app worldwide,” CEO Vlad Tenev told the AP. “So, everything that you use your money for, you should be able to do through Robinhood.”
