Robinhood rallies back

The Big Story

Robinhood's resurrection

And on the third day, HOOD rose again.

Robinhood's shares sank 8% below its initial public offering price in last week's disappointing debut. But three trading days after what was technically deemed a "broken IPO," the shares of the controversial online brokerage have come roaring back.

The stock rallied to $47 Tuesday, finally rising above its $38 IPO price. And it has kept surging, closing at $70 on Wednesday, up 100% for the week. There was so much demand for HOOD, trading had to be halted several times.

It's a puzzling turnaround for a company whose debut was marred by growing questions about its business model and regulatory hurdles.

Why the sudden change of heart on Wall Street? What happened is "very unusual, but explainable," said Rob Siegel, a Silicon Valley investor and Stanford Graduate School of Business management lecturer.

• The quick and easy answer is "pure speculation" at a time when "capital is chasing returns," he told Protocol.
• Plus, Robinhood is getting a boost from the same traders "that drive up meme stocks," he told Protocol. In fact, Robinhood just became the latest "meme stonk," as young investors would say.
• Now that's kind of ironic. Meme stocks took off during the GameStop trading frenzy, which landed Robinhood in hot water and drew fresh attention to its payment for order flow revenue model.
• Keep in mind, Robinhood's stock is easy to push up: By design, its IPO was a "low float," meaning a relatively small chunk of the company's shares were made available to the public. Insiders and early investors still hold most of it.

Then there's Cathie Wood. The CEO of ARK Invest, known as a star stock-picker, has been called the "high priestess of the weird finance era." And she was there when things got weird for Robinhood.

• Unfazed by the downbeat view on Wall Street of Robinhood, she bought about a million shares the day of the IPO.
• And she kept buying this week. On Wednesday, she purchased 89,000 shares of HOOD for the ARK Fintech Innovation ETF.
• Did that help spark the rally? Might retail investors who stayed on the sidelines last week (Robinhood allocated a huge chunk of IPO shares for its customers) have decided to follow Wood's lead?
• Certainly possible, since many retail traders "put their faith in Cathie and see her as their field general," Max Gokhman of Pacific Life Fund Advisors told CNN.

"I don't think we've seen something like this," Siegel said. There have been stock rallies in the past "driven by day traders and institutions piling in" usually because something changed in the company. But in the "weird finance era," driven by social media and mobile apps — a crazy time for investing that Robinhood helped create — that's not always the case.

"Nothing has fundamentally changed for the company to explain this volatility," Siegel said. "Today was all about craziness."

— Ben Pimentel (email | twitter)

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People Are Talking

Bill Gates said he regrets his relationship with Jeffrey Epstein:

• "It was a huge mistake to spend time with him, to give him the credibility. There were lots of others in the same situation, but I made a mistake."
• Asked whether he regrets some of his conduct regarding sexual-harassment issues, he said: "Well, certainly I think everyone does, but it's a time of reflection, and at this point, I need to go forward."

Stop hating on Lina Khan, Elizabeth Warren and others told Amazon and Facebook:

• "The real basis of your concerns appears to be that you fear Chair Khan's expertise and interpretation of federal antitrust law."

Jim Cramer has an ... interesting way of thinking about the metaverse:

• "You can have a discussion about Shakespeare with several people. The person to the left does the comedies, the person to the right does the histories, [the person] in front of you does the tragedies, and you kick it around."

NYU researcher Laura Edelson said Facebook is "silencing" the NYU Ad Observatory:

• "The work our team does to make data about disinformation on Facebook transparent is vital to a healthy internet and a healthy democracy."

Sen. Ron Wyden thinks crypto exchange rules could be refined:

• "Investors failing to pay tax they owe through cryptocurrency is a real problem, and I strongly support third-party reporting by exchanges where cryptocurrency is bought, sold and traded."

Making Moves

Carolyn Everson is Instacart's new president, becoming the company's latest Facebook steal. Everson served as the VP of global marketing solutions at Facebook.

Pico is getting SPAC'd. The tech services firm is merging with Betsy Cohen's FTAC Athena Acquisition in a deal valued at $1.75 billion.

Elon Musk is getting a(nother) biography. Walter Isaacson has "shadowed me for several days so far," Musk said, and the author of "Steve Jobs" and "Benjamin Franklin: An American Life" is going to add Musk's story to his collection.

Family Zone and OurPact are now members of the Coalition for App Fairness. The two companies work on cyber safety for children and families.

Yamini Rangan is HubSpot's new CEO. Previous CEO Brian Halligan is becoming executive chairman.

Karan Bajaj left WhiteHat after Byju acquired the ed-tech firm. His old classmate Trupti Mukker will take over as CEO.

In Other News

• Google fired dozens of employees for data misuse, according to Vice. Between 2018 and last year, the company let go of 80 employees for a number of security reasons, including mishandling confidential information and accessing data against Google policies.
• If Amazon mandates vaccines, workers may leave. At a company with already-high turnover, Amazon is struggling to figure out how to keep COVID-19 out of its warehouses without putting too many rules on its workers, according to Bloomberg.
• WhatsApp is trying out disappearing messages in an effort to increase privacy on the app. Users can now send a photo or video in a "view once" mode, which gives the receiving end one look before it goes away.
• Apple placed a senior engineering program head on leave and launched an investigation after she alleged sexism and hostility in the workplace. It's the second time the company looked into her claims.
• Companies are toying with ending all-you-can-eat subscriptions. The one-size subscription model is fading, as companies like Spotify introduce options for people willing to pay less, and more perks for those offering up more money for the platform.
• Business casual is the new Wall Street dress code, signaling a cultural post-pandemic shift in the workplace. Rather than wearing ties or slipping into heels, workers are heading to the office wearing more laid-back attire.
• Code for America employees are trying to unionize. About three-quarters of employees have shown support for unionization, which they said will help them bargain for better pay and promotional policies.
• Verizon is using AI to boost its 5G service. It's using AI models to cut through areas like buildings and bridges and expand its 5G signal coverage.

One More Thing

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