Shares of Robinhood are down more than 10% before the market open on Thursday as the company disclosed in a regulatory filing that it plans a stock offering of up to nearly 98 million shares.
Robinhood Markets Inc. said that the stock is being sold over time by selling shareholders and that it won't receive any proceeds from the sales.
The news comes as Robinhood's stock continues to have a wild ride on Wall Street. The company's shares rose more than 50% on Wednesday, and it has more than doubled in four days to follow up what had been a disappointing market debut. It’s a sharp turnaround from last week’s lackluster debut for the stock, when it sank 8.4% from its initial price of $38.
Even ahead of its initial public offering, experts warned that Robinhood’s stock could be primed for a more jagged ride than others on Wall Street because of its popularity among smaller investors.
Robinhood reserved a bigger-than-usual chunk of its IPO shares for smaller investors, which fits with its mission of “democratizing finance.” The company has introduced a new generation of younger and novice investors to the stock market, thanks to its zero-trading fees and easy-to-use app. But the move also gave fewer shares to big institutional investors, who have a reputation for being steadier holders of stock for the long term.