$HOOD/Robinhood's IPO is tomorrow.
Here's my prediction & how I'll play:
TLDR: I won't. The risk-reward just ain't right.
1/ Best prediction market to get color on retail sentiment is @FTX_Official's tokenized $HOOD/USD.
Left side shows last 1 month. Right shows last 5 days.
Here's my prediction & how I'll play:
TLDR: I won't. The risk-reward just ain't right.
1/ Best prediction market to get color on retail sentiment is @FTX_Official's tokenized $HOOD/USD.
Left side shows last 1 month. Right shows last 5 days.
What happened on June 19? Why the MASSIVE plunge?
That's when $HOOD announced a price target of $38-42 per share. Before that, retail had predicted $80+! Clearly no one cares for valuation here; the marginal buyer AT THE OPEN is price-insensitive which means downhill from there.
That's when $HOOD announced a price target of $38-42 per share. Before that, retail had predicted $80+! Clearly no one cares for valuation here; the marginal buyer AT THE OPEN is price-insensitive which means downhill from there.
2/ Institutions also gonna sit this one out.
Why? Well here's how IPOs normally work (credit: @matt_levine)
Hedge funds get exclusive access to buy a new stock the day before it trades openly. They buy low & flip it higher the next morning to price-insensitive retail FOMOers.
Why? Well here's how IPOs normally work (credit: @matt_levine)
Hedge funds get exclusive access to buy a new stock the day before it trades openly. They buy low & flip it higher the next morning to price-insensitive retail FOMOers.
But Robinhood saved 35% of its shares for retail at the IPO price! No more need to FOMO! 😲
So hedge funds are left wondering "If retail gets in with us, who's left to hold the bag?" 🤯
The asymmetrical advantage--read: systematically ensured alpha-- they normally have is gone!
So hedge funds are left wondering "If retail gets in with us, who's left to hold the bag?" 🤯
The asymmetrical advantage--read: systematically ensured alpha-- they normally have is gone!
Let's divide the trading world in 3:
- institutions
- smart traders
- dumb traders
Institutions gonna sit out for the aforementioned reason.
Smart traders read Matt Levine.
So ...
Dumb traders will rush in first & exhaust their buying power, leaving no marginal buyer after them.
- institutions
- smart traders
- dumb traders
Institutions gonna sit out for the aforementioned reason.
Smart traders read Matt Levine.
So ...
Dumb traders will rush in first & exhaust their buying power, leaving no marginal buyer after them.
3/ Good news for Robinhood is they still win!
The opening price should still come out higher than if Robinhood hadn't allocated any retail shares and just sold all to roadshow hedge funds. In other words, the quick buck that i-banks & funds usually pocket will instead go to RH.
The opening price should still come out higher than if Robinhood hadn't allocated any retail shares and just sold all to roadshow hedge funds. In other words, the quick buck that i-banks & funds usually pocket will instead go to RH.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
