Due to a dramatic increase in the value of the company’s shares, trading of the Robinhood “HOOD” stock stopped temporarily on Wednesday.
HOOD rose more than 109.45% during the last five days. The price of the stock is $62.98. With the price movement on the way up today, it is in direct contrast to the market debut on July 29. HOOD saw a 9% drop after only 15 minutes of trading.
Reasons for HOOD’s Meteoric Rise
While analysts did not have any insights as to what had caused the stock’s tremendous price increase on Wednesday, CNBC reported that ARK Invest head of ARK Fintech Innovation ETF, Cathie Wood, had purchased 89,622 shares of HOOD in the ARK Fintech Innovation ETF, making her over $4.2 million richer.
CNBC said that on the company’s initial public offering (IPO) debut, trading on Robinhood reached a high of 102.5 million shares.
Previously, Wood had bought 3.15 million shares of Robinhood since the company’s IPO launch last week.
After offering shares for the first time, Robinhood (which began trading at $38 per share) ended the day down over 8 percent, resulting in a price of $34.82.
The IPO was highly anticipated, not only because of this year’s increased trading activity among stocks that were formerly seen as shortable, like AMC and Gamestop, but also because of the popularity of these companies on both the general investing public and online communities like Reddit.
Dramatic Volume Increases of HOOD
While many have commended Robinhood for reaching out to previously neglected market segments, others have warned that the company has not adequately addressed the risks and lacks safeguards, which they argue leads to highly speculative trading in other areas, like cryptocurrencies, meme stocks, and derivatives.
The return of retail investors has taken place in the last few sessions following a tepid response to it before. On Tuesday, users acquired Robinhood shares for $19.4 million to bring their total investment in the company to $97.6 million and make them the sixth-most-purchasured stock and 11th-most-traded asset on retail platforms, according to Vanda Securities Pte.
According to the statistics, Tuesday’s total retail volume increased by nearly 10-fold over the previous day.
More than five-times what had been witnessed in previous days, over a billion shares changed hands in the first three hours of Wednesday’s session.
On Fidelity’s platform, there were almost 20,000 purchase orders placed for the HOOD stock, making it the most-traded business. The number of purchase orders AMC Entertainment saw was more than double the number of buy orders seen for AMC Entertainment.
CEO Vlad Tenev has noted the effect of meme stocks on society and Robinhood’s users:
You’re seeing [meme stocks] also get resources that allow them to hire really good management teams, in some cases, and then build for the future.