Robinhood dips 14% on its first day trading

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Robinhood dips 14% on its first day trading

Robinhood shares dipped as much as 14% at the open of Thursday's session following an announcement that some stockholders will cash in up to 97.8 million shares over time. The news comes after a massive two-day rally. This week the investment platform's shares had gained 100%.

Robinhood is the newest memes on Wall Street. It was one of the most popular stocks on SwaggyStocks' WallStreetBets Tuesday and Wednesday, according to Reddit users. The stock's comment volume has spiked over a two day span.

Shares were halted on Wednesday for volatility during the first few minutes of the trading session. The stock soared more than 80% at one point. The up move comes a day after the stock spiked 24%. The stock price blew past its public IPO price of $38 in stark contrast to the initial public debut was just Friday.

On Tuesday Fidelity's real-time order data showed Robinhood as a Top Stock, behind Advanced Micro Devices and AMC two stocks followed by WSB members.

While short squeezes have initially driven meme stocks in the past, Robinhood's move is not driven because of a short covering. Although there is long side activity in Yahoo Finance, it is the short side which is the main driver of its stock price volatility, explained Ihor Dusaniwsky of S 3 Partners.

The upward stock price pressure in HOOD is not a short squeeze for the simple reason that there has not been enough time to accumulate a large short position in HOOD, he added.

High profile investments in Robinhood may also be driving the price higher. Last week, according to Bloomberg Data, Robinhood's Ark Innovation ETF scooped up about 4.9 million shares of Cathie Wood, according to revenue sources.

Investors are monitoring Robinhood stock after its public debut on Thursday.

The stock sank as much as 12% below its IPO price during its first day trading on Nasdaq Trading. The shares closed down 8% the day before. Some questioned whether its lackluster performance had anything to do with Robinhood's hybrid auction-style debut, a lack of lock-up period for 15% of shares held by employees and others, or concerns over regulatory headwinds.

Over the past year and a half, GameStop has been a key player in the retail trading boom involving Robinhood and other stocks. In an unusual move, the company has allocated about 35% of its shares to retail investors for its IPO.

The options market shows that some investors are betting against an upward movement in the stock. Puts expiring August 20th outnumbered calls during the first day of option trading on Robinhood, according to Bloomberg data.