Robinhood Markets Inc. surged for a second day Wednesday as retail investors scooped up shares of the stock trading platform.
The stock climbed by as much as 82% to $84.97 before paring its gains. Shares have been halted several times due to volatility. Robinhood debuted on the Nasdaq last week at $38 a share, falling as low as $33.35 before finding a floor.
The strong rally in the stock has been propelled by retail investors, who on Tuesday bought 19.4 million shares, according to Vanda Securities data, about 10 times the previous day. That marked a sharp U-turn from the interest in Robinhood’s stock the day of its initial public offering when it was the 28th most popular among retail investors.
The reversal is a “sign of how quickly things can change in these markets,” Vanda analysts said.
SwaggyStocks, a website that tracks the real-time sentiment of traders on the WallStreetBets message board, found that Robinhood was the most talked-about stock on the forum over the past 24 hours.
The heavy interest from retail investors may also be expressed by heavy buying in Robinhood calls, with a strike price of $70 that expires on Aug. 20. Options have during the course of the pandemic became a popular investment tool for retail investors.
Additionally, ARK Invest CEO Cathie Wood, who has a cult following, on Tuesday purchased almost 89,622 Robinhood shares for the ARK Fintech Innovation exchange-traded fund, adding to her stake of 3.15 million shares that had been established following last week’s initial public offering. ARK is now the fifth-largest institutional holder of the stock.
Many on Wall Street remain skeptical of Robinhood despite the recent excitement around the stock.
“The reality of Robinhood is this is a dumpster fire,” Jeff Cica, founder of Circle Squared Alternative Investments, told FOX Business’ Stuart Varney earlier this week. “This company has very little ways to make money. This company has a business model that’s highly flawed, and only performed as well as it did by getting people to sign up for the platform because we’re in a raging bull market.”
