Robinhood’s stock faltered on its debut. The crowd cheered Reddit.

[ad_1]

font size

dream time

The rise of retail investor traffic in the past year led by users on Reddit forums like WallStreetBets has been closely linked to Robinhood’s markets and the spread of commission-free trading. But some members of the Reddit crowd didn’t want anything to do with the company’s high-profile initial public offering on Thursday.

WallStreetBets has attracted 10.7 million subscribers, most of whom joined this year. The pool of retail investors has grown so dramatically that data providers like Thinknum are selling statistics on stocks mentioned on Reddit to institutions looking to monitor their movements.

After Robinhood stock (stock ticker: HOOD) initially fell 12% below its $38 initial public offering price, a popular forum post mocked CEO Vlad Tenev and one commentator mocked Robinhood would limit its stock trading — a reference to the late January when online brokerages including Robinhood Limited were trading in some volatile stocks like GameStop (GME) and AMC Entertainment (AMC), citing collateral requirements amid frenetic trading.

The event, along with other notable technical outages during volatile trading days, led to calls from Reddit users urging others to leave the app. However, the company’s regulatory filings show that the boom in trading activity has spurred massive user growth, as well as revenue from the controversial payment for order flow. Robinhood receives payments from market makers that execute stock and options orders for broker clients. Some lawmakers have questioned the practice, arguing that it obscures the true costs of trading from clients. Brokers say the process gives retail investors a better deal and enables commission-free trading.

When reports in March revealed Robinhood’s plans to go public, some Reddit users joked that they wanted to shrink Robinhood’s stock using the company’s app. Others urged their peers to ignore the offer altogether, sensing that retail investors might be at a disadvantage. Although Robinhood said it will allocate up to 35% of its shares for Robinhood customers to buy in the IPO, the 8.4% share drop to $34.82 on Thursday means those users who took home the $38 IPO price will be in the region red.

“Cash Stocks Future,” one WallStreetBets commentator wrote Thursday.

Another WallStreetBets user said in a post that he enjoyed watching the stock drop. Another user wrote: “I am logging back into my Robinhood account so I can see the stocks in real time.”

On Superstonk, the GameStop-focused Reddit community and offshoot of WallStreetBets, a post that has since been removed by the moderators of a Fox Business commentator discussing a disappointing IPO with the caption “Get REKT $HOOD” has garnered thousands of upvotes. (Rekt is an Internet slang meaning “shattered”; upvotes equal likes.) Many Reddit users still actively participate in such communities that support GameStop or AMC stocks, and view discussions of other stocks as a distraction.

Not all Reddit merchants were united. On WallStreetBets, some argued in a senior post calling Robinhood “the worst company ever” was a stretch.

“I have mixed feelings for them,” one user wrote. Although they felt the company was dark at times, “If it wasn’t for them to revolutionize the industry, commission-free trading would be a tough dream and we’d still be paying $9.99 just to execute a trade. Having said that, I wouldn’t invest nor use it.”

Write to Connor Smith at [email protected]

.

[ad_2]