US 'Ants' Playground' Robinhood Stock Soars 50% in One Day (Summary)

Options trading begins, volatility rises
Cash Wood ETF's stock purchases
3-4 day surge in stock trading volume

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Suhwan] The stock price of Robinhood, a U.S. online securities platform, surged 50% in a single day. Amid this, opinions on Robinhood's valuation are divided within Wall Street, signaling the potential spread of controversy surrounding the sharp rise in its stock price.

On the 4th (local time), Robinhood's stock price on the U.S. Nasdaq surged 50%, closing at $70.39. The previous day, it had risen about 25%, resulting in an 86% increase over two days.

This marks a 90% surge just one week after closing 8% below its IPO price ($38) on the day it was listed, last month on the 29th.

Experts analyzed that multiple factors contributed to this sharp stock price increase. First, the start of options trading on that day was identified as one factor that increased volatility.

Additionally, Bloomberg reported that Cathie Wood's exchange-traded fund (ETF), known as the "Money Tree Sister," has been increasing its purchases of Robinhood shares, which also played a role.

According to CNBC, Cathie Wood purchased 89,622 shares of Robinhood stock (worth about $4.2 million) through the ARK Fintech Innovation ETF the previous day.

Wood has bought over 3 million Robinhood shares since last week. The Wall Street Journal (WSJ) reported that at least two other ETFs managed by Wood also hold Robinhood shares.

Notably, on the 3rd, Robinhood's trading volume surged tenfold compared to the previous trading day, and the stock price began to rise sharply. Furthermore, according to Dow Jones data, Robinhood was the second most traded stock in the U.S. market on the 4th.

CNBC reported that the active interest of "star investors" is a factor driving investments into growth stocks like Robinhood.

In fact, according to the Wall Street Journal (WSJ), mentions of Robinhood's ticker symbol "HOOD" surged on various social networking service (SNS) platforms such as Reddit's WallStreetBets, which triggered the GameStop incident earlier this year.

WSJ stated that individual investors, following trends, massively purchased Robinhood shares, driving the sharp rise in its stock price.

Experts evaluated this as a situation similar to the sharp price surges of "meme stocks" such as GameStop and AMC earlier this year.

Chris Grisanty, Chief Asset Strategist at MAI Capital Management, said, "It doesn't seem like the stock price is rising due to any specific reason," adding, "Like when GameStop skyrocketed, (with Robinhood) it's unclear why the stock price is going up."