The rise of this past year’s retail investor movement led by users on Reddit forums such as WallStreetBets has been inextricably linked with
and the proliferation of commission-free trading. But some members of the Reddit crowd didn’t want anything to do with the company’s high-profile initial public offering on Thursday.
WallStreetBets has attracted 10.7 million subscribers, with most joining this year. The group of retail investors has grown so large that data providers like Thinknum sell stats on stocks mentioned on Reddit to institutions looking to keep tabs on their movements.
After Robinhood stock (ticker: HOOD) initially tumbled 12% below its $38 IPO price, a popular post on the forum mocked CEO Vlad Tenev and a commenter quipped that Robinhood would limit trading of its own stock—a reference to late January when online brokerages including Robinhood limited trading in certain volatile stocks like
(AMC), citing collateral requirements amid frantic trading.
That event, along with other high-profile technical outages during volatile trading days, has led to calls from Reddit users who urged others to leave the app. That said, the company’s regulatory filings show the surge in trading activity has spurred immense user growth, as well as revenue from the controversial process of payment for order flow. Robinhood receives payments from market makers who execute stock and options orders for the brokers’ clients. Some lawmakers have questioned the practice, arguing it obscures the true costs of trading from customers. Brokers say the process gives retail investors a better deal and enables commission-free trading.
When reports in March revealed Robinhood’s plans to go public, some Reddit users joked that they wanted to short Robinhood stock using the company’s own app. Others urged their peers to ignore the offering entirely, sensing retail investors could be at a disadvantage. Though Robinhood said it would set aside up to 35% of its stock for Robinhood customers to purchase in the IPO, the stock’s 8.4% drop to $34.82 on Thursday means such users who got in at the $38 IPO price would be in the red.
“Future penny stock,” a WallStreetBets commenter wrote on Thursday.
Another WallStreetBets user said in a post that they enjoyed watching the stock fall. “I’m logging back into my Robinhood account so I can watch the stock in real time,” wrote another user.
On Superstonk, a GameStop-focused Reddit community that branched from WallStreetBets, a post that has since been removed by moderators of a Fox Business commentator discussing the disappointing IPO with the caption “Get REKT $HOOD” garnered thousands of upvotes. (Rekt is internet slang for wrecked; upvotes are the equivalent of likes.) Many Reddit users are still actively involved in such communities backing shares of GameStop or AMC, and view discussions about other stocks as a distraction.
Not all Reddit traders were united. On WallStreetBets, some argued a top post calling Robinhood “by far the worst company to have ever existed” was a stretch.
“I have mixed feelings about them,” a user wrote. Though they felt the company had been shady at times, “if not for them revolutionizing the industry, commission free trading would be a pipe dream and we would still be paying $9.99 just to execute a trade. That said, I’m not going to invest nor do I use them.”
Write to Connor Smith at [email protected]