I don’t know how much you pay attention to the headlines, but this one caught me off-guard yesterday.
I have been traveling a lot lately, as you know (safely back in Seattle now!) and while I obviously heard about Robin Hood, I can’t say I watched it too closely.
But it’s obvious: Wall Street hated this deal!
What is the Retirement Pattern?
If you’ve heard me talk about the Retirement Pattern…
The one pattern I’ve used most effectively throughout my career…
But you’ve never gotten a change to learn what it is…
When Tom Busby and I went live earlier this week, we talked at length about the Retirement Pattern, and how it could be the key to trading whatever the market throws at us next.
As it turns out, there are several theories about why this Robinhood IPO didn’t work.
One article I saw suggested that because Robinhood sold many of these shares to users of its platform, giving them access at the same price that they gave access to big-wig Wall Street brokers.
That’s a neat idea, especially for a company that claims to be “for the people” (though we know it took some dings in that regard during the first memestock boom).
The problem is, by allowing its own users in on the ground floor, they may have lowered the interest in their shares once the IPO was finished and the stock began to trade.
That drove the price down over time, although you can see from the chart, during the day, the stock traded as high as $2 above its open price, and sold for roughly $1 below the close.
That explanation makes sense. Wall Street doesn’t love being cut out of things, and without them there to sell huge chunks of shares right out of the gate, it probably drove down the buying frenzy we often see in IPOs.
Does that mean Robinhood made a mistake? Not necessarily.
The company still generated $2.1 billion through this process, so they’re probably not TOO upset!
In any case, I think these kinds of stories are so fascinating! I hope you do as well!
It’s a reminder that even the so-called Wall Street insiders don’t always know what to expect. Which actually should be a confidence-booster for all of us!
Chat soon,
Markay Latimer
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