Armchair retail traders are divided ahead of the upcoming flotation for stock investing app Robinhood, as users who once piled into GameStop and AMC on its platform threatened to boycott the IPO entirely.
Robinhood found itself at the centre of a trading frenzy for so-called meme stocks earlier this year, as online platforms saw their user numbers spike with heavy demand for investing. The tech firm later received backlash for its handling of the craze, as it was forced to seek billions in emergency capital and shut down or limit access to certain stocks.
Conversations on social platform Reddit show investors are considering a snub of Robinhood’s markets debut, with some also making plans to shift their accounts away to other brokers.
“Do your part by moving your account from RH if you have one there, or help someone else move to another broker,” said one comment, in response to a post criticising a number of traders for planning to short the IPO.
“Don’t buy or short it, forget about RH,” said another.
Robinhood was contacted for comment.
The Silicon Valley trading app has been embroiled in a tangle of legal proceedings scrutinising its role in the GameStop craze, as well as its own internal structures.
The firm settled a case with US agency Finra for $70m over allegations it misled customers and approved ineligible traders last week, while its cryptocurrency brokerage paid a $10m fine for allegedly violating anti-money laundering rules in New York. Its chief executive Vlad Tenev appeared before US lawmakers to give evidence on the GameStop frenzy earlier this year.
“Nobody trusts them anyway, only an actual moron would invest in their IPO,” said one user, who received a chorus of applause known as upvotes from other users.
Robinhood filed for its anticipated float earlier this month, drawing attention to its financials on social media. The findings showed the platform had benefited from a major spike in users during the frenzy, but still suffered a $1.4bn loss for the first three months of the year.
The trading app also suffered multiple days of outages last year as its technology struggled to handle increased demand in the early days of the pandemic, with some unable to trade on the platform during periods of extremely high volume.
“Just forget Robinhood altogether. Let them go down in lawsuits and loss of customer base,” said one post with more than 7,000 upvotes, first reported by Reuters.
Robinhood opted to warn potential investors in its S-1 filing earlier this month of the possibility it could become a meme stock itself, which could result in significant volatility of its share price.
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