'Don't want to miss it': Robinhood IPO loyalists stay the course

FILE PHOTO: The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company's IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly/File PhotoAs a user of the trading app, the Houston-based author of life-coaching books applied for and received 50 Robinhood shares in its IPO.

More than a fifth of Robinhood's US$2.1 billion IPO was snapped up by the app's users such as Ornelas. Some put on a brave face after Robinhood shares ended their first day of trading down 8.4per cent, valuing the company at US$29 billion. Many of the retail investors who drove the Robinhood app's meteoric rise did not come through for its IPO, however. They cited concerns over its frothy valuation, the risk of regulators cracking down on Robinhood's business, and lingering anger with the company's imposition of trading curbs when the 'meme' stock trading frenzy flared in January.

Mike Reed, one of the Robinhood customers who participated in the IPO, said he was staying the course. He bought 26 shares at the IPO price of US$38 and placed an order to sell them once the share price hits US$72. The shares closed at US$34.82 on Thursday instead."I was hoping it would end up in a little more positive territory," said Reed, who works for a cybersecurity firm in Austin, Texas.

Some investors drew similarities with the IPO of Facebook Inc in 2012. That IPO was also offered at US$38 per share and a quarter of it was snapped up by retail investors. The stock plunged on its second day of trading and took more than a year to get back up to its IPO price. It handsomely rewarded the investors who stuck with it - Facebook is now worth more than nine times its IPO price.

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