(Reuters) -Robinhood Markets Inc’s shares surged over 20% on Tuesday, adding more than $7 billion to the value of the online brokerage and elevating its stock above the price set in last week’s poorly received IPO.
The shares were at $46.80 in late afternoon trading, marking a third day of gains and taking them well above the price of $38 set in last Wednesday’s IPO.
Relatively small trade sizes suggest Robinhood has become the latest of several stocks driven higher this year in retail investor frenzies, said Sahak Manuelian, managing director of trading at Wedbush Securities in Los Angeles.
“It’s the meme du jour,” Manuelian said.
About $3.6 billion worth of Robinhood shares had changed hands by late afternoon, among the top 10 most heavily traded stocks on Wall Street.
On Thursday, Robinhood tumbled 8% in its first day of trading, surprising some analysts who had expected strong support from the small-time traders it serves and for whom it had taken the unusual step of as much of as 35% the shares in the flotation.
Company executives sold shares a day before the launch, with Chief Executive Vlad Tenev cashing in 1.25 million shares for about $45.5 million, according to filings at the time of the IPO. Those sales were disclosed in advance and any impact had dissipated by Tuesday.
Star investor Cathie Wood’s flagship ARK Innovation ETF has accumulated nearly 5 million Robinhood shares, now worth about $226 million, according to data on the fund’s website.
Robinhood’s smartphone trading app was instrumental in fueling this year’s “meme” stock frenzy, but retail investors mostly snubbed the stock on online forums such as Reddit last week.
Shares in the company were among the top five trending stocks on trading-focused social media site Stocktwits on Tuesday, although almost three-quarters of the commentary was negative. The platform is commonly seen as a measure of interest from retail investors.
Robinhood’s trading app discourages users to sell shares within the first 30 days of IPOs, restricting them from participating in future IPO deals for two months if they do.
(Reporting by Medha Singh in Bengaluru; additional reporting by Lance Tupper in New York and Noel Randewich in Oakland, California; Editing by Alden Bentley, Arun Koyyur and David Gregorio)