Source: Wall Street
Early major shareholders involved in the Robinhood convertible bond sale in February applied to sell nearly 97.9 million Class A common shares, pushing Robinho back to $50, down sharply from yesterday's closing high of more than $70. Robinhood, which used to be the battlefield, has suddenly become the prey of the new round of retail vs organization wars.
"Internet celebrities" Internet securities firm Robinhood has repeatedly stood at the forefront of the storm in the first week of listing. Before Thursday, it rose for four consecutive days to double the share price, recovering the embarrassment of going public and breaking. Today, it fell sharply in double digits as major shareholders applied to sell nearly 100 million shares.
The early major shareholders involved in the Robinhood convertible bond sale in February applied to sell a total of nearly 97.9 million Class A common shares of the company, and the proceeds will go to the shareholders, according to filings filed with the Securities and Exchange Commission (SEC) on Thursday, Aug. 5.
In February, Robinhood had to sell $3.55 billion of convertible bonds to raise capital because of the surge in popular holding shares in the battle between retail short-selling institutions and faced a potentially large margin call, the documents said. At that time, the first investors who bought convertible bonds were allowed to sell half of their holdings, and the remaining 50% would be lifted on August 25, that is, three weeks later.
This includes New Enterprise Associates, the US venture capital firm, one of the leading shareholders with a stake of about 10 per cent, which is believed to be likely to cut its stake by 3.9 per cent or sell 2.9 million shares. Shareholders of other prominent venture capital firms, such as Andreessen Horowitz, Iconiq Capital and Ribbit Capital, also plan to sell their shares.
The negative news sent Robinhood down nearly $20 per share, or more than 28%, on the day, pushing down $50 in integer digits again, closing down nearly 27.6% at $50.97 on Thursday, close to an intraday low and basically giving up all its gains since Tuesday.
It was the first time Robinhood closed lower since it went public on Thursday, ending four straight gains and falling from an all-time high of more than $70 yesterday.The stock closed up more than 24 per cent on Tuesday and more than 50 per cent on Wednesday, and the intraday high, which rose 82 per cent to $85, repeatedly triggered circuit breakers, with the company's market capitalization rising as high as $65 billion.
Given its popularity among millennials investors, Robinhood's US IPO, which should have been popular among retail investors, priced at $38, was set at the bottom of the guidance range, closed down more than 8 per cent on its first day of trading and was embarrassed to break. Wednesday's closing price would have doubled from IPO's first-day close, but the cumulative gain narrowed sharply to 46 per cent by Thursday's close.
Many analyses, such as financial blog Zerohedge, have pointed out thatMajor shareholders choose to rush to sell shares in groups within a week of listing, giving a head-on blow to retail investors who re-enter the market this week. Used to act as a retail investorVsRobinhood of Institutional Warfare platformNow it happens to be the "prey" of the new round of empty war.
Robinhood shares surged this week, just after Cathie Wood, the bull queen, bought more than $65 million of the stock on Monday, with a total position of more than $200m, according to the chart. Robinhood successfully surged out of the water on Tuesday, returning to above its offering price for the first time since its listing, and reached an all-time high of double digits on Tuesday and Wednesday.
At the same time, options related to Robinhood shares also began trading yesterday, and the maximum exercise price of its call option rose to $70, supporting the stock's sharp rally, and the Robinhood closed at more than $70.
Retail investors were the main driver of the stock's sharp rise on Wednesday, according to data compiled by Vanda Securities, with Robinhood being the fourth most traded stock on all retail hot platforms. Retail investors bought back a total of $467 million worth of the stock, equivalent to a net purchase of $50.5 million, reflecting a surge in interest from individual investors.
Ben Onatibia, an analyst at the agency, points out that retail demand has soared after a poor IPO performance, which is extremely rare in IPO.
Many analysts are calling for calm. Wolfe Research, a brokerage that gives Robinhood a "hold" rating and a target price of $45 (which represents actual bearish), advises investors not to "YOLO":
"We cannot sincerely advise investors to participate in Robinhood trading in either direction."