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Cathie Wood's Ark purchases 1.3 million shares in Robinhood after a disappointing debut

30 July (Reuters) - Robinhood Markets Inc (HOOD.O) shares finished higher Friday, a day after the ARK Innovation ETF, run by famous stock picker Cathie Wood, claimed it purchased 1.3 million shares of the online brokerage during its bleak market debut.

Robinhood's stock closed up just under 1% at $35.15, after sliding earlier in the session and losing more than 8% in its debut on Thursday. According to market observers, retail investors, who have propelled rises in shares of so-called "meme stocks," have received a chilly greeting, as has Robinhood's move to reserve up to 35% of its shares for its users.

The stock price remained lower than its initial public offering price of $38 per share.

That dismal showing has not deterred Wood, who rose to prominence due to the excellent performance of her funds in 2020. On Thursday, according to ARK's daily statement for its actively managed ETFs, it purchased 1,297,615 shares of Robinhood in its ARK Innovation ETF. That would have been worth roughly $45.2 million at Thursday's closing price.

According to data on the fund's website, the Ark Innovation ETF owned 3,623,092 shares of Robinhood as of Friday, accounting for 0.55 percent of the fund's portfolio and worth $126 million.

Ark did not reply quickly to a request for comment.

Other investors remained away, citing valuation worries, the potential of regulation, and lingering resentment at the company's imposition of trading restrictions during the meme stock trading frenzy in January. more info

"It goes by the name Robin Hood and steals from the people. "You gotta love it," one user commented on Reddit's popular WallStreetBets, where retail investors have gathered this year to coordinate buying that has helped drive significant rallies in Gamestop (GME.N), AMC Entertainment Holdings (AMC.N), and other names. more info

According to Vanda Research, retail investors purchased a net $18.85 million of Robinhood stock on Thursday, a relatively modest sum compared to comparable initial public offerings. Didi Global Inc, a Chinese ride-hailing company, raised $69 million from retail investors on its initial public offering, while Bitcoin exchange Coinbase raised more than $57 million earlier this year.

According to Fidelity Investments data, consumers on its brokerage platform placed 31,736 buy orders and 7,451 sell orders for Robinhood stock on Thursday.

Robinhood said that it would reserve between 20% and 35% of its shares for its users in an unusual move. The company warned in its IPO registration that retail investor participation might cause a rollercoaster ride in its shares, which could be too hazardous for individuals looking for long-term sustainable benefits.