📊 Stock of the week - Robinhood (30.07.2021)

1:23 PM July 30, 2021

📆 Robinhood debuted on the US stock market

  • Robinhood debuted on Nasdaq stock exchange

  • Shares dropped 8% during the first trading session

  • Company turned profitable in 2020

  • Stock available in xStation under ticker HOOD.US

Flood of earnings reports from the major US tech companies have drawn the attention of stock investors this week. However, there was also another event on Wall Street that was closely watched - the debut of Robinhood (HOOD.US), a US company offering a retail-friendly app for trading. However, the first day of trading can be seen as a big disappointment with the company's shares dropping over 8% below the reference point.

Company that revolutionized trading

Robinhood is a very well-known company, especially to traders in the United States, its main market. Company was one of the first ones to offer commission-free stock trading to retail investors while also giving them access to a massive market for stock options. Company was also one of the first ones to offer free accounts and lower trading limits in 2015. Post-pandemic low interest rate environment encouraged people to move their savings from bank accounts to the stock market and Robinhood has greatly benefitted with the number of active users jumping above 31 million.

Sales are surging

Robinhood has been increasing its user base regularly and so has grown its revenue. Company generated annual sales of $2.9 million in 2015 and managed to increase it to $69 million by the end of 2018. This figure quadrupled to $278 million in 2019. Pandemic-hit 2020 that resulted in a big jump in new accounts, unsurprisingly, led to another massive jump in sales, to €959 million. 2020 was also the year when the company became profitable, reporting a net income of $7.4 million. As the company charges no commissions on stock and ETF trading, it has to rely on selling order flow and charging commissions on options as a source of income and those are not at the core of the company's operations. Nevertheless, as Robinhood operates only in the United States so far, it has a massive potential for geographical expansion and increasing its client base further.

Disappointing debut

While Robinhood as a company and its app are very popular, investors do not look too convinced. Shares debuted on Nasdaq on Thursday, July 29 but it was a disappointing debut. Share price dropped over 8% below the reference point of $38 and finished trading at $34.82. The IPO price of $38 has already been at the low end of market expectations. The $38 a share price tag valued Robinhood at $31.7 billion. Robinhood experienced the largest drop in percentage terms when compared with IPOs of other companies of similar size, like Pepsi or Uber. 

Investors can find Robinhood Class A shares in xStation trading platform under stock ticker - HOOD.US. Shares trade during regular US trading hours (2:30 pm - 9:00 pm BST)

Robinhood (HOOD.US) debuted at $38 per share yesterday. Share price even tested $40 mark shortly after the session had begun but moods began to deteriorate later on. Following a steady downward move, shares finished session at $34.67 and settled at $34.82. 1-minute interval. Source: xStation5

The content of this report has been created by X-Trade Brokers Dom Maklerski S.A., with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. X-Trade Brokers Dom Maklerski S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

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