Robinhood has certainly had a rollercoaster ride so far: The stock tumbled 8% on its first day and fell as low as $33.25 the second day. But it’s since roared back up to more than 40% above the IPO price and is now trading around $54, even briefly hitting a high of $85 last week.
“The platform that powered the meme stock movement has itself become a meme stock — sometimes to Robinood’s benefit and sometimes to its detriment,” said Jonathan Anastas, chairman of Alpha Esports Tech, a mobile gaming firm.
So much for the Reddit army of “apes” bringing Robinhood to its knees? Perhaps. The company has been credited with — and also criticized for — helping turn investing into something like a game. But Anastas argues Robinhood is simply following the money.
“They appeal to a trader demographic that is focused more on emotion and momentum,” Anastas said. “Robinhood is not valued on fundamentals.”
Already on the hunt for acquisitions
Still, Robinhood is now a publicly traded company with a market valuation north of $45 billion and it’s looking to grow its business quickly — just like Facebook did before it.
“We share a common goal of eliminating the barriers that keep people from participating in our financial system,” she added.
The fact that Robinhood is looking to make an acquisition so soon after its IPO is also similar to a big deal Facebook pulled off back in 2012, just before it went public: Facebook bought Instagram for $1 billion, a deal that some felt was too pricey at the time.
But CEO Mark Zuckerberg wound up having the last laugh. The Instagram acquisition helped Facebook become a bigger player in mobile and allowed it to attract even more of the young users advertisers covet. Nine years after its “failed” IPO, Facebook is now worth more than $1 trillion.
Plenty of competition in fintech and from Wall Street
It’s hardly a given, however, that Robinhood is on track for a similar surge by 2030. Robinhood CEO Vlad Tenev, like Zuckerberg, will need to stay on top of market trends to get even bigger.
“Robinhood has had a lot of naysayers but they’ve amassed millions of account holders and the marching orders are clear,” said Michael Kamerman, CEO of Skilling, an online brokerage firm. “I think Vlad wants to attract even higher net worth clients.”
Robinhood will also need to fend off a large swath of competition over the next decade.
With that in mind, Robinhood could also one day wind up as a juicy takeover target for a larger financial firm that would probably love to get access to Robinhood’s younger customer base.
“Wealth has moved from boomers and Gen X to millennials and Gen Z,” Anasta said. “Younger investors have different preferences.”