Robinhood Markets stock rocketed higher again on Wednesday, leaping as high as $85, an 82% jump on the day.
There was no apparent news to explain the rise, though there was clearly interest among retail traders. Nearly 10,000 buy orders had been entered on Fidelity by retail investors early Wednesday, three times as many as the next most-bought stock, General Motors (ticker: GM). At least with GM, the move made sense, given that the company just reported earnings. The stock was up just 29% ay $60.58 at 12:20 p.m.
For Robinhood (HOOD), there is an information vacuum now. The company knew of no particular news driving the move, which caused the stock to be halted because of volatility at the start of trading.
Shares of Robinhood began trading last Thursday at $38, and they closed down 8% on the first day. Several company insiders sold on the first day, while more than 301,000 of the company’s customers bought shares. In more recent days, prominent asset manager ARK Investment Management has been buying shares, scooping up 4.9 million for its flagship ARK Innovation fund — those shares are now worth more than $300 million. On Tuesday, Robinhood shares rose 24%.
Robinhood now trades at about 40 times its last four quarters of revenue, many times higher than other brokerage firms, which tend to trade at less than 10 times trailing revenue. TD Ameritrade was worth 26 times its revenue at the height of the dot-com boom, shortly before that stock and the entire tech industry crashed.
Robinhood hasn’t yet announced a date for reporting its second-quarter earnings. The company has already warned investors that its customer and revenue growth may slow in the current quarter.
Write to Avi Salzman at [email protected]
