NEW YORK (AP) — Robinhood’s stock flew again on Wednesday, and it has more than doubled in four days to follow up what had been a disappointing debut on Wall Street.
Robinhood Markets soared 50.4% to $70.39 in trading that was so feverish that trading was temporarily halted three times in the first half hour after the market opened. It’s a sharp turnaround from last week’s lackluster debut for the stock, when it sank 8.4% from its initial price of $38 on Thursday.
Even ahead of its initial public offering, experts warned that Robinhood’s stock could be primed for a more jagged ride than others on Wall Street because of its popularity among smaller investors.
Robinhood reserved a bigger-than-usual chunk of its IPO shares for smaller investors, which fits with its mission of “democratizing finance.” The company has introduced a new generation of younger and novice investors to the stock market, thanks to its zero-trading fees and easy-to-use app. But the move also gave fewer shares to big institutional investors, who have a reputation for being steadier holders of stock for the long term.
Robinhood has found support from some big names on Wall Street. Cathie Wood, a star stock picker who focuses on innovative companies, has bought shares, for example.
Her flagship ARK Innovation exchange-traded fund owns nearly 4.9 million shares, making Robinhood the fund’s 29th largest holding. The fund has about $25.5 billion in total assets.
Outside of that, though, analysts were grasping for explanations for the surge in the stock. For some, it was reminiscent of the explosive moves higher for GameStop and other “meme stocks” earlier this year.
Those stocks soared suddenly to heights that professional investors called irrational. Many were beaten-down companies in the midst of a turnaround, and they caught waves of interest from smaller-pocketed investors who egged each other on in online forums to buy more.
Robinhood has created plenty of passion, among users and critics alike, and the polarizing effect has shown in its wild, short time on Wall Street. After opening at $38 last week, it fell to $34.82 in its first day of trading. On Wednesday morning, it briefly touched $85.
Robinhood is already delivering the strong growth that Wall Street is always hungry for: Revenue soared 245% last year to $959 million. It has amassed an estimated 22.5 million funded accounts since its 2013 founding, as customers trade everything from stocks to options to crytpocurrencies.
But Robinhood has also paid more than $130 million in recent years to settle a long list of accusations by regulators. Critics say Robinhood encourages unsophisticated investors to make trades too often that may be too risky, and regulatory scrutiny is likely to stay high.
Some users are also still angry at Robinhood and other brokerages for temporarily barring them from trading shares of GameStop and other meme stocks early this year. But as its performance this week has suggested, Robinhood may be turning into something of a meme stock itself.
“I hate Robinhood, but I got in and made $1k in 20 minutes,” said one user on Reddit’s WallStreetBets forum, a central hub for the explosion of meme stocks this year.
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