Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Robinhood shares have ‘high meme-stock risk’, says analyst

Robinhood’s shares are still seeing wild swings amid fervour from small-time retail investors.

  • Robinhood Markets (Nasdaq: HOOD) share price tumbles to US$53.94 per share on Tuesday (10 August 2021)
  • Certain early investors may sell almost 98 million of their shares over time
  • The news prompted profit-taking among some individual investors
  • The stock gained 8% last Friday after a turbulent week
  • Interested in trading Robinhood shares? Open an account with us to get started.

Robinhood's stock price turbulence continues

Following a roller-coaster week with wild swings, shares of retail favourite Robinhood Markets slid 5.1% to end at US$53.94 on Tuesday. The HOOD counter had gained 3.3% on Monday.

Robinhood plummeted 27.6% last Thursday, after a filing showed that more than a dozen early investors would be able to sell their shares over time. Nonetheless, retail investors made net purchases of US$8 million in Robinhood shares on the same day, according to Vanda Research.

The stock then gained 7.9% last Friday to cap off a turbulent week, which saw Robinhood adding billions of dollars to its market value.

Sentiment aggregator Swaggystocks last Friday said Robinhood was the most discussed company on Reddit’s Wallstreetbets page.

What halted Robinhood’s winning streak?

The online brokerage last Thursday said that its early investors may sell up to 97.9 million shares over time, which prompted the stock price to tumble, snapping its four-day rally.

None of the proceeds will go to Robinhood; the selling stockholders will receive all of the funds from the sales.

The latest filing sparked concerns among retail investors and led to some of them taking profits, even though the potential sales were already stated in the IPO prospectus in early July, said National Securities strategist Art Hogan.

The insiders that proposed to sell the large chunk of shares included venture capitalists who took convertible shares about six months ago at deep discounts in return for rescuing Robinhood from a margin call, Bloomberg reported.

However, these insiders would only be able to start selling their holdings after receiving clearance from the US Securities and Exchange Commission. That can only take place after Robinhood files its quarterly earnings, which would likely be 18 August 2021, the company said.

What’s your view on Robinhood? Take a position on the stock today

Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.

*Based on revenue excluding FX (published financial statements, June 2021).

Will Robinhood shares continue to surge?

Buying activity from retail investors increased over the past week, and could be key in fuelling the stock price higher, said Vanda Research.

‘If retail investors start withdrawing money from tired meme stocks to buy HOOD, there's still room for the move to continue,’ it added.

Wolfe Research initiated coverage with a ‘peer-perform’ rating, equivalent to ‘hold’, and a US$45 price target.

However, Wolfe advised caution as it ‘cannot in good faith recommend investors get involved in HOOD on either the long or short side’ because there is ‘high meme-stock risk with outsized retail involvement’, which suggests the stock may not trade on fundamentals.

Private equity firm Patriarch Organization’s chairman Eric Schiffer said retail investors ‘need to recognise that this is going to trade like a crypto or other meme-related stocks in the short run and they could see significant positional changes’.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.