By
staff writer
March 26th, 2024
Following its halt in the trade of the shorted stocks last week, Robinhood has earned a strained public sentiment, which is reportedly going to strain its IPO plans.
American financial services company Robinhood Markets Inc has eased the restrictions it placed on some volatile heavily shorted stocks, but not without shelving its Initial Public Offering (IPO) plans. As reported by CNBC, Robinhood has relaxed the restrictions it placed on the trading of the shares of GameStop Corp (NYSE: GME) amongst other shorted stocks after it raised as much as $2.4 billion from investors as noted on Monday.
The injected liquidity helped Robinhood meet the requirement meted out by the Depository Trust & Clearing Corporation, who demanded increased deposit to prevent clearing and settlement issues amidst the volatility the retail traders on Reddit plunged the shorted stocks into. With the easing, users of the Robinhood app can now buy as much as 100 shares of GameStop as well as 100 Options contract.
Other stocks including AMC Entertainment Holdings Inc (NYSE: AMC), Nokia Oyj (NYSE: NOK), and Express Inc (NYSE: EXPR) amongst others also saw a revised trading restriction on the Robinhood app. Users can buy 1,250 AMC shares and Options contract respectively, the Nokia restriction did not change from the 2,000 benchmarks for both the number of shares and Options contracts while Express traders can access as much as 3,000 each for both the shares and options contract respectively.
The restriction of trading of the shorted stocks has however taken its toll on the firms as the retail sentiments that spurred the buy-up of the stock has waned. GameStop closed Tuesday trading with a 60% surge, AMC is down 41.29%, Nokia also shared in the losses with a 7.36% dip and Express shed as much as 32.40% of its accrued gains on Tuesday. Perhaps, the easing of the restriction will spark a revived retail pump in these stocks.
Robinhood IPO Plans Strained
Following its halt in the trade of the aforementioned shorted stocks in the past week, Robinhood has earned a strained public sentiment, a development that is reportedly going to strain its IPO plans. As reported by Cointelegraph, the Robinhood IPO plans are on hold following a decline in public confidence, a factor that is important to achieve a successful public debut.
Despite the brokerage firm doing all it can to correct the situation, many public comments are targeted at faulting the firm who comes off as shielding the institutional short-sellers whom the retail investors are after.
Per the Cointelegraph report, detailed observers pointed out that about 35% of Robinhood’s revenue came from the short-sellers that were being targeted by the Reddit chat board r/wallstreetbets. With the delayed IPO plans not yet confirmed by Robinhood, the platform may be awaiting the current situation to be rolled back and trading activities on its platform return to normal before making specific moves to make its public debut.