Cathie Wood purchases more than $45 million worth of Robinhood stock on the first day of trading.
Cathie Wood invested more than $45 million in Robinhood, seemingly unfazed by the app’s disappointing first day of trading.
According to ARK Investment Management’s daily trading report, Wood’s flagship $25.5 billion ARK Innovation fund purchased nearly 1.3 million shares of the company on Thursday.
ARK now owns more than $45 million in Robinhood, based on the company’s Thursday closing price of $34.82 per share — down 8.37 percent from its opening price.
Wood shot to prominence in 2020, when her primary active fund reported a year-end gain of 149 percent. She’s developed a reputation for being an outspoken proponent of growth stocks in hot sectors such as space exploration and financial technology.
Her apparent endorsement of Robinhood at its current price point may be instrumental in reviving the company’s fortunes.
It made a difficult Nasdaq debut Thursday. The IPO was priced at $38 per share, the low end of its range, and the stock continued to fall once it began trading, eventually closing at around $29 billion in valuation.
Investors may have remained on the sidelines due to concerns about potential regulatory challenges.
CEO Vlad Tenev testified before Congress in February regarding the company’s contentious decision to halt trading in stocks popular with the Reddit Rally community, such as GameStop and AMC, raising concerns about the company’s business model.
Additionally, the company has been investigated and forced to settle with federal regulatory agencies for past errors, which it has largely blamed on startup growing pains.
Gary Gensler, President Biden’s SEC chairman, has since pledged to investigate the company’s practice of selling customer order flow to high-speed trading firms such as Citadel Securities.
“There are costs associated with Robinhood’s no-fee trading model,” Gensler has stated. “The costs are hidden.”
Others have criticized the business model as well, including Warren Buffett’s longtime business partner Charlie Munger.
Robinhood attempted to practice what it preached during its initial public offering, offering retail investors early access to up to 35% of its shares via its app.
However, retail interest in Robinhood was relatively muted, according to boutique investment research firm Vanda Securities.
Amateur investors purchased just $18.85 million worth of Robinhood stock on Thursday, according to their data.
That is significantly less than what other major technology companies saw in their initial days of trading, according to Vanda.
For example, Chinese ride-hailing giant Didi saw retail investors purchase $69 million in shares on its initial public offering, while Coinbase raised $57.35 million from retail investors just a few months ago.