Robinhood Markets Inc. was sharply lower after the company said existing shareholders are planning to sell up to 97.9 million shares.
The Menlo Park, California-based trading app developer will not receive any proceeds from the sale.
|HOOD||ROBINHOOD MARKETS, INC.||44.57||+0.25||+0.56%|
Selling stockholders include early venture capital investors, like entities affiliated with Andreessen Horowitz and Ribbit Capital, looking to reduce their stakes following last month’s initial public offering.
Robinhood shares had surged 87% over the previous two sessions as retail investors piled into the stock. The rally propelled the stock past last week’s initial public offering price of $38.
Robinhood was on Wednesday the fourth most-traded stock by retail investors, according to data released by Vanda Securities.
Those investors piled into the stock after a regulatory filing showed ARK Invest CEO Cathie Wood raised her stake to more than 3.2 million shares.
However, many Wall Street pros are skeptical that Robinhood’s business model is built to last.
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“Robinhood is a one-trick pony with only one way to make money which is through getting paid for order flow,” Jeff Sica, founder of Circle Squared Alternative Investments told FOX Business on Wednesday. “Once this frenzy ends, I anticipate this stock is going to drop like a rock.”
View more information: https://www.foxbusiness.com/markets/robinhood-stock-tanks-existing-shareholders-plan-share-sale