Robinhood Markets (NASDAQ: HOOD) this morning attempted to calm investors after the name ultimately dropped 27.6% yesterday. The fall from grace was related to a Resale S-1 that was filed yesterday morning by the company, which will enable certain investors to sell their stake in the company.
The S-1, which will effectively register securities of the company with the SEC, enabling holders to eventually sell their equity when deemed fit, is for roughly 97.88 million shares of the issuer. Given the significant amount of shares expected to be sold off, investors left the name in droves yesterday, as retail investors often do when new information tugs at their emotions.
The company this morning attempted to calm those fears, explaining (mostly to its retail base) that the shares were already outstanding, and that they relate to the conversion of a Tranche 1 convertible note related to the closing of its offering. Furthermore the company clarified that sales cannot occur related to the S-1, until the form is declared effective by the SEC.
The most significant part of the explanation offered by the company is found at the bottom of the release, when Robinhood states, “Robinhood does not expect that it will be in a position to obtain a declaration of effectiveness until after its financial statements for the period ended June 30, 2021, have been filed with its upcoming Quarterly Report on Form 10-Q which it expects to file on August 18, 2021.“
The simple explanation appears to be enough for the firms investor base, whom have pushed the name 12.6% higher in pre-market trading, with the equity currently priced at $57.41 per share at the time of writing.
Information for this briefing was found via the Robinhood. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.