“I think it’s a real thing”

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Robinhood CEO and co-founder Vlad Tenev on Thursday defended retail clients who invest in so-called meem stocks, saying the phenomenon gives beleaguered companies access to capital they wouldn’t otherwise have.

“I think it’s a real thing,” Tenev told CNBC’s Andrew Ross Sorkin Thursday before the stock trading app debuted on Nasdaq. “There are clients who love these companies, and they want them to thrive.” “you see [meme stocks] Also having the resources that allow them to hire really good management teams, in some cases, and then build for the future.”

Robinhood has helped attract unprecedented levels of young new traders to the stock market during the pandemic. This rally continued into 2021, and was marked by frantic trading around Mimi’s shares.

Millennials’ favorite stock trading app found itself in the middle of a firestorm in January amid short squeezes at GameStop, fueled in part by retail investors led by Reddit.

“I think the interesting thing about what we’ve seen in retail investing over the past year is that a lot of these companies have been hit really hard by the pandemic,” Tenev said. You have the institutions basically writing off these companies, and then the retail investors come in and support them.”

At the height of the meme stock rally, Robinhood restricted trading of some securities due to increased capital requirements from clearinghouses. Robinhood raised more than $3.4 billion in just a few days to support its balance sheet.

“I don’t know if people have understood the implications of what high retail participation in the markets means, but I think it’s basically a very good thing,” Teneff added.

Trouble selling stock

Robinhood, which is expected to start trading Thursday under the HOOD index, has sold shares in its initial public offering at $38 a piece — the bottom line of the $38 and $42 range — valuing the company at about $32 billion. The online brokerage sold 52.4 million shares, raising nearly $2 billion.

Robinood and its insurers haven’t finished allocating their IPO shares until about 9 a.m., an unusual circumstance for any union at that point in the process. Goldman Sachs and JPMorgan Chase are the two leading investment banks in the deal.

“They are begging us to buy Robinhood shares,” CNBC’s David Faber said on “Squawk on the Street” before the opening bell on Thursday. And I said: What is left for them? Faber said.

According to CNBC’s Leslie Baker, Robinhood – which planned to allocate 20% to 35% of its IPO shares to its retail clients – was sending letters late Wednesday to retail investors about buying the shares.

Jim Cramer, host of “Mad Money,” said Robinhood’s IPO is “a must-do bargain.”

“I think retail morale is on the line because these are the people who want so much to make money and don’t really understand the process because the process is so opaque,” ​​Kramer said.

Robinhood is a five-time CNBC Disruptor 50 and topped this year’s list. Subscribe to our original weekly newsletter that gives a closer look at 50 CNBC Disruptor companies like Robinhood, before they are released to the public.

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