In this week’s episode of The Bull & The Bear podcast, I tell you why you should avoid the highly anticipated Robinhood IPO.
I’m not a big fan of investing in initial public offerings (IPOs) when they first hit the market.
There’s always a pop in the share price because, after an IPO, only about 10% to 20% of total shares are traded at first.
It’s not until the lockup period ends — usually 180 days after the IPO prices, when insider shares open to the broader market — that you get a feel for the long-term performance of an IPO stock.
Because so few total shares are traded at first, there is much higher demand for supply. Thus the stock price inflates.
And demand for the Robinhood IPO will be astronomical after the online brokerage dominated headlines (good and bad) over the last year or so.
In this episode of The Bull & The Bear, I look at Robinhood’s upcoming IPO and show that, while attractive, you should stay away.
Big Questions Before the Robinhood IPO
Let me preface this by telling you I started a trading account with Robinhood when I started trading a few years ago.
It was the perfect platform for retail investors like me who didn’t have thousands of dollars to open an account with larger trading firms like TD Ameritrade or Charles Schwab. Plus, commission-free trading is hard to beat!
In late 2020, Robinhood got caught up in the “meme stock” craze that sent thousands of retail investors into buying companies like GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings Inc. (NYSE: AMC).
Some actions taken by Robinhood at the height of this craze left a bad taste in some users’ mouths — mine included.
Do positives overshadow some questionable practices and make the Robinhood IPO one you should to invest in?
I’m going to tell you in this week’s episode of The Bull & The Bear.
Pro tip: Chief investment strategist Adam O’Dell is bullish on biotech. I urge you to check out Adam’s presentation on what he calls “Imperium.” He’s confident this DNA trend has the potential to be bigger than internet stocks in the ’90s. Click here to find out more, including the details on how to access Adam’s top four DNA stocks to buy today.
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Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.