Robinhood stock outruns Bitcoin in intraday crash, down over 10% in pre-market
The cost to purchase one Robinhood share (HOOD) dropped massively in the pre-market session on Thursday, beating even so-called volatile cryptocurrencies like Bitcoin in terms of intraday losses.
In detail, HOOD was down 10.2% to $63.25 as of 8:00 am EDT compared to its $85 high in the previous session. On the other hand, Bitcoin (BTC) is down almost 6% over the past 24 hours, trading around $37,600.
The stock plunged partly because of its excessive valuations that prompted traders to lock their interim profits. Moreover, its sell-off accelerated after Robinhood Markets had announced that it would sell up to 97,876,033 of its Class A shares over time.
Nevertheless, the company clarified that it would not receive any of the proceeding capital. Instead, the selling shareholders — including Andreessen affiliates and New Enterprise Associates — would receive the benefits.
HOOD’s decline came a day after it soared higher by more than 50% in a meme rally, earning Robinhood’s zero-fee trading platform a market capitalization of $58.9 billion. The supersonic volatility caused multiple trading halts on the Nasdaq exchange.
Supportive retail traders, led by Cathie Wood’s flagship Ark Innovation exchange-traded fund, started buying HOOD after its disappointing initial public offering on July 29.
Related: Echoing GameStop saga, retail traders fuel Robinhood stock price hike
That marked another example of how an army of small traders enjoyed influence over Wall Street, a trend Robinhood itself helped boost during the infamous GameStop and AMC stock pump in January 2021.
The frenzy eventually led to the shut down of Square Capital, a hedge fund that had placed a short bet on GameStop. Additionally, Melvin Capital, which was also bearish on GameStop, suffered a 53% loss.
Retail-led upside booms also spilled over the cryptocurrency market, with meme crypto Dogecoin’s (DOGE) year-to-date returns shooting upward of 8,000% following the congregations of traders on Reddit and other social media platforms who wanted to push the Dogecoin prices to $1. To date, DOGE’s price has managed to reach nearly $0.70.
But the so-called meme stocks dropped hard following their super-volatile bull runs. For instance, GameStop’s was down by 70% on Wednesday from its record high of $483. Similarly, Dogecoin dropped 75%, and AMC Entertainment — 64.23%.
London-based hedge fund Odey Asset Management, which manages about $4.1 billion, recently took a short bet on the AMC stock.
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