- Robinhood CEO Vlad Tenev told CNBC retail investors in meme stocks have helped struggling companies.
- Tenev made his comments ahead of the trading app’s own trading debut.
- Robinhood earlier this year angered many customers when it halted buying of GameStop, AMC, and other meme stocks.
- See more stories on Insider’s business page.
Robinhood CEO Vlad Tenev said Thursday that retail investors who’ve put money into so-called meme stocks have been a benefit to struggling companies and the market overall.
“I think what’s interesting with what we’ve seen in retail investing over the past year is that a lot of these companies have been hit hard by the pandemic, right?,” including airlines, retailers, and movie chains, said Tenev in an interview on CNBC before the online brokerage’s own stock began trading..
“[You] have the institutions that are basically writing these companies off and then retail investors coming in and keeping them up and supporting them.”
Video game retailer GameStop and movie theater chain AMC Entertainment have become popular stocks among retail traders active on Reddit and Twitter. Tenev’s firm has been a force behind the retail trader movement, with millions of new investors funding accounts on the app during the pandemic.
There are “customers that love these companies they want them to thrive. And you’re seeing [companies] also get resources that allow them to hire really good management teams, in some cases, and then build for the future,” Tenev said.
AMC, the world’s largest movie-theater operator, has taken advantage of the rally in its shares this year, saying in June it had raised about $1.25 billion through selling shares during the second quarter and the funds would strengthen its balance sheet.
“I don’t know if people have understood the ramifications of what high retail participation in the markets means but I think fundamentally it’s a very good thing and we’re excited to be a part of it,” said Tenev.
Robinhood’s IPO late Wednesday priced at $38 per share, the low end of its targeted range of $38 to $42 per share. Shortly after launching Thursday on Nasdaq, the stock dropped as much as 12% in volatile trading.
Robinhood angered many of its customers earlier this year when the trading app halted buying of GameStop, AMC, and other meme stocks during a stunning rally. Robinhood had pledged to earn back the trust of those customers. The company has more than 18 million accounts and 17.7 million active monthly users.
According to Goldman Sachs, retail investors have been on track to put $400 billion into the stock market in 2021.