Robinhood (HOOD) shares tanked 27% to close the session at $50.27 after several wild sessions. Thursday's decline followed an announcement that some stockholders would be cashing out up to 97.8 million shares. The news came after a massive two-day rally. The investment platform's shares had gained 100% earlier this week.
Robinhood appears to be the newest meme stock on the Wall Street, highlighting the power of retail investors. It was one of the most mentioned stocks on Reddit's WallStreetBets on Tuesday and Wednesday, according to SwaggyStocks. The stock's comment volume spiked over a two day span.
Shares were halted for volatility in the first few minutes of the trading session on Wednesday. The stock soared more than 80% at one point. The upward move comes a day after the stock spiked 24%. The stock price blew past its IPO price of $38 on Tuesday in stark contrast to its public debut last week.
While short squeezes have initially driven up "meme" stocks in the past, Robinhood's move is not driven because of a short covering. "Until HOOD stock borrow availability grows and the overall amount of HOOD shares shorted becomes relevant – buying and selling by long shareholders is the reason behind HOOD’s price moves," Ihor Dusaniwsky of S3 Partners told Yahoo Finance.
High profile investments in Robinhood may also be helping fuel the recent rally. Last week Cathie Wood's Ark Innovation ETF (ARKK) scooped up about 4.9 million shares of Robinhood, according to Bloomberg data.
The recent movements are a stark contrast compared to the stock's public debut last Thursday.The stock sank as much as 12% below its IPO price during its first day of trading on the Nasdaq (^IXIC). Shares closed down 8% that day. Some questioned whether its lackluster performance had anything to do with Robinhood's hybrid auction-style debut, a lack of lock-up period for 15% of shares held by employees and others, or concerns over regulatory headwinds.
Robinhood has been a key player in the retail trading boom involving GameStop (GME) and other stocks over the past year and a half. In an unusual move, the company allocated about 35% of its shares to retail investors for its IPO.
Ines is a markets reporter covering stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre