Robinhood, the commission-free brokerage famous as the pump through which day traders inflated the meme-stock bubble earlier this year, enjoyed a turbulent start to its own life as a public company.
By the time it listed on Nasdaq on July 29, the company’s free trading app with no minimum account size had attracted 18 million customers, many new to the stock market. Few understood that Robinhood monetizes their activity through payment for order flow from the big market makers, almost guaranteeing that they don’t get the best price.
Neither did the company.
It priced its own IPO at $38, achieving a market capitalization of $32 billion. Within minutes, its shares fell and ended the first day down 8%, tarring the deal as the most disappointing large IPO of recent times.
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No matter. In the first week of August, Robinhood itself became a meme stock. Its shares shot up to $70 on August 4 then fell back to $50 a day later and closed the first full week at $55.
