Market Newbie Challenging Goldman, Facebook in First Week

Options volume surged near 330,000 contracts in HOOD first session

Managing Editor
Aug 10, 2021 at 11:12 AM
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App-based stock-buying platform Robinhood Markets Inc. (NASDAQ:HOOD) made its public trading debut on Thursday, July 29. The initial public offering (IPO) price came in at $38, and per the Wall Street Journal, more than 300,000 users of the trading app bought shares at IPO, or around 1.3% of the company's funded account base. So far, only two analysts have initiated coverage on the security, both with a "buy" rating.

On its first day of trading, HOOD climbed as high as $40.25, and by its fifth session hit a top of $85 -- more than double its IPO price. However, on Thursday, Aug. 5, Robinhood stock landed on the Short Sale Restricted (SSR) list, plummeting more than 27% after the company announced its existing shareholders (consisting of mostly venture capital firms) will sell up to 97.9 million shares. In the amended filing it was specified Robinhood will not receive any proceeds from the sale of its common stock.

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In the table above, Schaeffer’s Senior Market Strategist Chris Prybal broke down HOOD’s market cap value compared to different levels in its share price, based off an outstanding 835,680,000 shares. The leap in market value from Robinhood stock at $30 versus $85 is drastic -- $25 billion to $71 billion, respectively. As of mid-Thursday, HOOD stood at a market cap of $51.15 billion, with the shares just shy of $62 in afternoon trading.

In terms of HOOD options, they began trading on Wednesday, Aug. 4. Not only were traders diving head first toward the equity, but options volume surged near 330,000 contracts in the session -- coming in only second to Facebook (FB). Per Trade-Alert, "Robinhood options were the 14th most-active single stock class, with puts leading calls 170k to 160k and a total of $320M of premium changing hands."

Digging even deeper into market cap analyses, because Robinhood as a company presents as an app that allows consumers to trade and manage their stock market portfolios virtually, it spreads the equity into multiple sectors: software and capital markets. Below, the tables show where Robinhood stands among its peers, and surprisingly, it’s already made quite the name for itself. Even at its current value, it ranks among the top 10 of both sectors. What’s most eye-catching about the capital market list is that Robinhood is already sitting at almost half of Goldman Sachs’ (GS) market cap -- a company that was founded in 1869 and has 60 times the revenue of HOOD.

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Subscribers to Schaeffer's Chart of the Week received this commentary on Sunday, August 8.

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