The stock market was rebounding significantly from last week's losses on Monday morning, but Social Capital Hedosophia Holdings V (IPOE) was doing especially well. As of 11 a.m. EST, shares of the blank-check company, which is planning to take fintech start-up SoFi public, were up by nearly 11%. The move higher follows an impressive rally on Friday.
Today's surge appears to be based on the continuing fallout from the recent short-squeeze phenomenon and the resulting trade restrictions being implemented by trading app Robinhood. Many of Robinhood's millions of customers were disappointed to learn that certain trading restrictions seen last week will continue to be enforced Monday.
For example, Robinhood traders can buy a maximum of one share of GameStop, 10 shares of AMC Entertainment, and 20 shares of Express.
SoFi has a brokerage app that is positioned as a direct competitor to Robinhood (it offers fractional shares, app-based trading, and focuses on younger investors). What's more, it's the only brokerage with a direct connection to famous special-purpose acquisition company (SPAC) investor Chamath Palihapitiya, who leads the SPAC taking SoFi public. To put it mildly, Palihapitiya has quite a bit of influence over the younger investing crowd.
Today's Robinhood restrictions are significant because it shows that last week's issues might be more of a lingering limitation for investors than previously thought, which could lead to large numbers of Robinhood users seeking other trading platforms. With a fintech focus and the backing of one of 2021's most famous investors, SoFi is in a great position to benefit.