Robinhood Customers Left Disappointed After All IPOs Fail

Robinhood Markets Inc. Chief Executive Vlad Tenev was fielding questions on the company’s latest earnings call when one person asked about a dormant project. Tenev said that the company is still working on the project and is hopeful that it will be able to launch it soon.

The caller asked when Robinhood would resume letting customers invest in initial public offerings.

According to a Bloomberg analysis, the IPO Access program has been a flop for investors so far.

The initiative, which allowed users to buy shares of companies like Sweetgreen Inc. and Allbirds Inc. before they debuted on stock exchanges, resulted in losses for customers who still hold the shares. In an already dismal market for IPOs, those offered by Robinhood have performed even worse.

Listings on US exchanges with offers greater than $80 million between May 1 and December 9, 2021.

Since their debuts, all 23 IPOs that Robinhood opened up to its customers have declined by double-digit percentages. Five of them - Iris Energy Ltd., Sono Group NV, Vaxxinity Inc., Stronghold Digital Mining Inc. and Argo Blockchain Plc - have lost at least 89% of their value.

Despite the challenges, Robinhood remains committed to its mission.

Tenev, 35, said that as soon as the IPO market turns around and there are more IPOs that meet their criteria, they will be hard at work to bring them to their customers.

Robinhood's own IPO in July 2021 was among those offered to its clients, and it hasn't gone well. More than 300,000 users bought the shares for $38, and those who held on to their positions have gotten clobbered. The stock tumbled 10% to $10.78 at 10:15 a.m. in New York, extending its decline since the IPO to 72%.

A spokesperson for Robinhood, based in Menlo Park, California, declined to comment.

Robinhood has struggled to maintain its momentum amid rising interest rates and declines in stocks and cryptocurrencies, despite signing up millions of new customers during the pandemic lockdowns. Many of these customers are novice traders, which may explain the difficulties the firm has had in keeping up with the market.

The app had 12.2 million monthly active users in September, down from a year earlier. Robinhood introduced new features, including a web3 wallet and extended trading hours. The app still earns most of its revenue from trades, but as engagement falters, it faces the challenge of increasing activity on the platform.

Robinhood has announced two rounds of job cuts this year, dismissing more than 1,000 employees. The company plans to shutter seven offices as part of its cost-cutting measures.