The stock market may be at record highs, but there were plenty of red lights flashing today. The most glaring of these would have to be the dismal opening day performance of Robinhood, the company most obviously associated with the post-Covid bull market. After pricing at the bottom end of its preliminary range, the stock fell sharply shortly after it opened—and finished the day down 8.4%.
That’s not a bad outcome for Robinhood’s early shareholders, given that this time last year the company was raising money privately at less than half even today’s depressed price (see this story from The Information on how major VCs will fare). That said, Wall Street’s tepid reaction to the IPO suggests skepticism about Robinhood’s business model, which is based on encouraging average people to buy stocks—even if they’re clueless about what they’re buying (AMC, GameStop). That is the embodiment of the dangers of a market where shoeshine boys give you stock tips, as the famous line goes.