Online Robinhood Market Inc. shares dropped to a record low following its earnings announcement that fell short of expectations on Wall Street. The stock prices slide arrested when Cathy Wood stepped up to buy the company’s shares.
ARK Investment Management, owned by Wood, bought around 2.44 million Robinhood shares Friday. This is the highest purchase since the stock made its debut in the market in July last year, as per Bloomberg Data compiled from Ark’s trading data.
The buying came when the share price of Robinhood dropped below $10 at one point before rebounding in line with the broader U.S. market. Robinhood is still trading at 67% below its IPO price and ranks among the worst stocks globally, making its high-profile debut during the pandemic and joining London’s THG Plc. And China’s Didi Global Inc is there.
The flagship fund of Cathy Wood, ARK Innovation ETF, bought 1.95 million shares. In comparison, ARK Fintech Innovation ETF and ARK Next Generation Internet ETF each purchased 230,000 shares of Robinhood on Friday as per the daily trading updates of ARK.
ARK is one of the significant shareholders of Robinhood today as it has been continuously buying every week since the end of October ever since the stock price dropped below its IPO price of $38 as per data compiled by Bloomberg.
The flagship ETF fund of Ark had struggled last year after growing by more than 150 % in 2020. As the markets and economies reopened after the vaccine rollout, investors dumped tech stocks that they found highly speculative and instead shifted to buying stocks that would grow in the broader market recovery. This led to a 24% decline in the ARK fund last year.
This year ARK has fallen another 27% as Federal Reserve move towards rate hike is exacerbating the pain. According to HIS Markit Ltd data, the percentage of short interest to outstanding shares in ETF has gone up to a record 11 % in early January.
According to Cathy Wood and her firm, the investment horizon should be at least five years. She acknowledged that the disruptive stocks targeted by her are often volatile. ARK’s daily trading updates show only active decisions by the management team, and they do not reflect the redemption activity of investors.
