(Reuters) -Shares of latest social media-darling Robinhood Markets Inc fell 13% on Thursday after surging for four straight days, although some analysts believe the rally has more room to run if small-time traders continue snapping up the stock of the online brokerage.
Robinhood’s shares were down at $61.30 after jumping more than 50% on Wednesday, when the stock hit a market capitalization of $58.80 billion as interest among small-time investors soared on social media.
The online brokerage topped the list of the most mentioned stocks on Reddit’s WallStreetBets for a second straight day, according to sentiment tracker SwaggyStocks, but data from Vanda Research showed retail investors had only bought about $100 million worth of its stock this week.
“If retail investors start withdrawing money from tired meme stocks to buy (Robinhood), there is still room for the move to continue,” analysts at Vanda said.
Robinhood’s smartphone trading app was instrumental in fueling this year’s “meme” stock frenzy that sent the shares of video game retailer GameStop Corp as high as 1,600% in January.
GameStop’s shares have since more than halved in value.
Robinhood’s stock, meanwhile, has surged well above its initial public offering price of $38. Volumes have also shot up, with more than 175 million shares traded on Wednesday. It sold 55 million shares in the IPO.
Robinhood’s options market debut drew trading volume of about 330,000 contracts on Wednesday – second only to Facebook, according to Trade Alert.
“Robinhood has become just what it has created with meme stocks,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.
“Most people see Robinhood right now as being largely held by people that are not overly committed to owning the stock long term … so there is a high likelihood there is a lot of volatility associated with it.”
Robinhood said on Thursday its stockholders could sell up to 97.9 million of shares and that the company will not receive any of the proceeds, according to a regulatory filing.
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