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Serially-Charged Robinhood Doubles in Price in Three Days – But Appears to Have Forgotten about Its Second Quarter Earnings Report after Losing $1.4 Billion in First Quarter

Courtesy of Pam Martens

NY Stock Exchange Trading Floor-150pixRobinhood is the poster boy for the craziest, most unregulated stock market era since 1929. That one ended in tears. This one will also.

Robinhood is the trading app used by millions of young, inexperienced retail investors to trade stocks and options on their mobile phones. The company went public last Thursday on the Nasdaq stock market (the wonderful folks who brought us the dot.com crash in 2000). Robinhood closed the trading week last Friday with a share price of $35.15 – an embarrassing 7.5 percent below its IPO price of $38. Curiously, so far this week, through Wednesday’s closing price of $70.39, the stock has soared 100.256 percent from Friday’s closing price.

In an efficient, regulated stock market that is capable of engaging in its core function of price discovery, Robinhood would not have doubled in price in three trading sessions. The company lost $1.4 billion in the first quarter of this year and has yet to report its second quarter earnings or even announce the date that it will report those earnings – or lack thereof.

But in this crazy stock market era, earnings are just pesky details. The business media actually reports on how many times a company’s name is mentioned on Reddits’ Wall Street Bets forum. For example, Reuters – an international business wire – reported yesterday that Robinhood “was the most mentioned stock on WallStreetBets, the Reddit platform at the center of this year’s ‘meme stock’ rally, over the past 24 hours, according to sentiment tracker SwaggyStocks.”

After its big runup in price, Robinhood reported after the market closed yesterday that another 97.9 million Class A shares will be sold over time – meaning shareholders who bought in the IPO will be diluted. That sent the price of the stock down about 10 percent in pre-market trading this morning.

Big losses in the first quarter are far from the only negative about Robinhood. On December 17 of last year, the SEC brought charges against the company “for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders.” The company paid a fine of $65 million to settle the SEC charges.

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