Sale of Robinhood shares aggravated by investor confusion and valuation concerns – .

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Sale of Robinhood shares aggravated by investor confusion and valuation concerns – .


Robinhood Markets Inc.’s offer to revolutionize IPOs instead generated losses for investors, after one of the year’s most anticipated listings fell.
In a regulatory filing in early July, the co-founders of the trading platform said they would open their initial public offering to clients on the same terms as institutional investors. They said they recognize this may be the first IPO that many will participate in and pledge to “never sacrifice the safety of our clients’ money.”
It now appears that Robinhood’s commitment to “democratizing” the IPO process played a role in the big initial stumbling of the offer on Thursday. An innovative auction system has created some confusion among investors, many of whom are already wary of a company’s valuation that has attracted the attention of regulators and criticism from clients, people involved said in the process.
The stock, initially priced at $ 38, the low end of the target range, is below that. This is a disappointing result at a time when IPOs are booming and investor appetite for new issues is high.
Robinhood proudly tore up the traditional IPO playbook. He insisted that a large chunk of his stock – up to 25% ultimately – go to his individual investor clients, against a normal retail allocation well below 10%. He said employees could sell part of their shares immediately instead of being locked in for six months. And when it came to pricing its IPO, Robinhood decided to use a hybrid auction process, which attempts to award stocks to investors based on what they’re willing to pay. pay, regardless of who they are.

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