Robin Hood has sparked enthusiasm among small investors as rising stock prices baffle analysts, options trading, Cathy Wood's endorsement and Jim Kramer tweets in favor of the company. .
Nearly a week after it failed in its first public trade, speculation is now swirling as to why its stock is up 100% this week.
Robin Hood's stock, which fell about 8% from its $38 IPO price during its IPO Thursday, closed at $70.39 on Wednesday.
It reflects the sudden rebound, to the social networking site Reddit's groups of retail investors, who previously drove the maddening rise of GameStop and AMC Entertainment. ) that took over Wall Street this year.
Market participants point to a combination of factors behind Robin Hood's wild move: Wednesday marked the first day of stock options trading - which can lead to volatility - Cathy Wood, co-founder of ARK Investment Management, continues to buy shares in its funds.
About 329,000 Robin Hood options were exchanged on Wednesday. This makes the opening-day volume of its options the second-highest ever, after Facebook, according to a note from CBOE Global Markets' head of product intelligence, Henry Schwartz.
In an unusual move, the company sought to allocate up to 35% of the shares in its initial public offering to retail investors, but eventually sold about 20-25% them.
Demand was weak compared to other recent high-profile offerings such as Chinese passenger services giant Didi Global and Coinbase. However, on Tuesday, total retail volumes rose nearly 10-fold. About the previous day.
The data collected by Bloomberg showed that the Robin Hood options contracts that witnessed the largest volume on Wednesday were buy options or contracts that allow the investor to buy shares, at a price A speculative value of $70, which expires on August 20.
