Robinhood stock rises up to 81% on day two of wild trading

Robinhood stocks rose again on Wednesday, continuing a wild rally in the stock of the newly public stock trading app. Trading was suspended several times due to volatility.

Robinhood stock hit $ 85 at one point, up 81% from Tuesday’s close, and gaining more than 140% for the week. In the afternoon trading session, the share’s gain for the day was 53%.

Robinhood stock makes up for its lackluster debut on Nasdaq last week. The stock opened at $ 38 per share on Thursday, the lower end of its offering range, but then fell 8% on day one and traded largely below that price until Tuesday, when it rose more than 24%.

The volatile stock surpassed its debut IPO volume of 102.5 million shares and traded over 104.6 million shares to date on Wednesday.

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It’s unclear what exactly is driving the stock up on Wednesday, but on Tuesday ARK Invest’s Cathie Wood bought 89,622 HOOD shares in the ARK Fintech Innovation ETF, a position valued at approximately $ 4.2 million based on the closing price by Robinhood of $ 46.80. The position is in addition to the roughly 3.15 million shares Wood has bought from Robinhood since the company’s debut last week. The popular investor’s attention usually goes to growth stocks.

“It looks like ARK Investments has taken a large stake and it seems like retailers are doing it too,” said John Heagerty of Atlantic Equities. Heagerty has an overweight rating on Robinhood and a price target of $ 65 per share.

“It’s not normal for a stock this size to move that fast. I think that would put institutional investors off, ”added Heagerty, who still believes the platform Robinhood created has a lot of value.

Robinhood has also attracted the attention of the individual investors it serves. Speculative activity exploded this year when day traders in online chat rooms managed to create massive short squeezes on names like GameStop and AMC Entertainment, causing great pain for short sellers and rocking volatility in the overall market. Robinhood is considered a major gateway to what is known as meme stocks.

HOOD is the number one ticker on the WallStreetBets tracker Swaggy Stocks, which shows 700+ mentions on the Reddit chat room. Robinhood was also the most heavily traded stock on Fidelity on Wednesday morning.

“Unpopular opinion: Robinhood still has the best mobile interface,” it says in a post with 4,600 interactions.

Robinhood CEO and co-founder Vlad Tenev defended individual investors investing in Reddit names, saying the phenomenon is giving competitive companies access to capital they would otherwise not have.

“I think it’s a real thing. There are customers who love these companies, they want them to thrive,” Tenev told CNBC’s Andrew Ross Sorkin on Thursday ahead of the stock trading app’s Nasdaq debut. “You see [meme stocks] also get resources that allow them to hire really good management teams in some cases and then build them for the future. “

“It’s a payment for the order flow story with crypto as a kind of kicker,” said Stephanie Link, chief investment strategist at Hightower, on Wednesday to CNBC’s “Squawk Box”. “In the second quarter, total sales increased by 5 to 10% compared to the first quarter. Well, if you look at the payment for order flow data, that number is even down 23% in the second quarter, competitive, but the crypto kicker is likely helping Robinhood and they are likely to gain stake. “

“However, it’s super expensive. It’s hard to get your hands on the 11x price-to-sales valuation, ”added Link. The online broker Charles Schwab trades 7x.

Robinhood is a five-time CNBC Disruptor 50 company and topped this year’s list. Sign up for our weekly, original newsletter that has a closer look at CNBC Disruptor 50 companies like Robinhood.

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