IPO Price Set Below Expectations
Individual Investors Allocated Shares Suffer Losses from First Day of Listing
[Asia Economy New York=Correspondent Baek Jong-min] Robinhood, a securities trading app mainly used by individual investors in the U.S., is struggling in its first trading session after going public.
On the 29th (local time), Robinhood started trading at $38 on the Nasdaq market and was trading at $33.8, down 10%, as of 12:40 PM.
Unlike a typical initial public offering (IPO), Robinhood allocated 35% of the newly issued shares to its users. This is a contrasting choice compared to U.S. companies, which usually allocate shares only to institutional investors during an IPO.
Robinhood's poor performance was anticipated in the pricing of the offering. The IPO price was set at the lowest end of the expected range of $38 to $42, at $38. This was interpreted as a sign that investor demand was weak. This situation was reflected in the trading as well.
Robinhood's market capitalization also fell below $30 billion, standing at $29 billion.
The Wall Street Journal reported that Facebook, which allocated 25% of its shares to individuals during its IPO, also saw its stock price plunge immediately after listing and took one year to recover its IPO price.
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