Robinhood Markets closed the first day of trading down 8% to $34.82 a share as many investors who used the popular trading app to participate in this year’s “meme” stock trading frenzy ignored its initial public offering (IPO).
Only 16 of the 99 U.S. companies tied to at least $10 billion when they went public declined on the first day, according to Dealogic, which has data stretching back to 1995.
Robinhood’s easy-to-use interface has made it a hit among young investors who remotely trade cryptocurrencies and stocks like GameStop Corp. during the COVID-19 pandemic.
Several IPO investors have pulled out of the sidelines, citing concerns over its overvaluation, the risk of a regulatory crackdown on Robinhood, and continuing anger over the company’s imposition of trading restrictions when the meme stock trading frenzy erupted in January.
Robinhood had said it would reserve between 20% and 35% of its shares for its users.
Robinhood shares last stood at $38 at the IPO.
Stanford University roommates Vlad Tenev and Baiju Bhatt founded Robinhood in 2013. Both will hold a majority of the voting power, with Bhatt holding around 39% of the outstanding shares and Tenev 26.2%.
Robinhood angered some investors and U.S. lawmakers this year when it restricted trading in some popular stocks after deposit requirements at its clearinghouse increased tenfold.
The company announced this week that it has received inquiries from U.S. regulators investigating whether its employees traded shares of GameStop and AMC Entertainment Holdings before the trading restrictions were implemented in late January.
For more information, read the original story in Reuters.