Please ensure Javascript is enabled for purposes of website accessibility

Why Robinhood and AMC Stocks Are Moving in Opposite Directions This Week

By Howard Smith – Aug 6, 2021 at 3:13PM

Key Points

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is Robinhood the newest meme stock?

What happened

The meme stock movement took a new turn this week after the Robinhood Markets (HOOD 1.22%) brokerage app went public through an initial public offering late last week. As many in the investment community can recall, during the retail investor trading frenzy earlier this year that caused GameStop (GME 3.46%) and AMC Entertainment Holdings (AMC) stocks to soar, Robinhood's platform was overwhelmed, and it needed to restrict buying on some of these names. The trading activity expanded to other heavily shorted stocks, or stocks popular in social media, including fitness and health drink maker Celsius Holdings (CELH 3.70%), and the meme stock was born.

Robinhood's IPO brought an interesting twist for the online trading crowd, and the meme stocks moved in different directions. After a wild ride, Robinhood shares look to be ending the week with almost a 60% gain, while AMC stock has dropped about 12%. Celsius seems to still be a favorite, with its shares up 10% on the week as of midday Friday. 

A blue arrow and chart moving down, next to a gold arrow and chart moving up.

Image source: Getty Images.

So what

Robinhood priced its IPO at $38 and ended its first day of trading below $35 per share. But that changed this week when trading volume exploded, and the stock shot up to an intraday high of $85 on Wednesday. In the meantime, the volume in AMC shares, and the stock price itself, slumped this week. 

Now what

Robinhood wants to be known as a brokerage for the people. Its stated mission is to "democratize finance for all." The company backed up that philosophy by allocating about 25% of its IPO shares for retail investors on its platform. 

The irony is that while AMC CEO Adam Aron has engaged with the Reddit trading crowd on social media and has become something of a hero to the group, Robinhood CEO Vlad Tenev became a villain to those same traders when the platform temporarily froze buying of GameStop and AMC shares due to overwhelming volume and insufficient funds in January. 

It's unclear what specific group of buyers drove the price up so far and so fast this week, but for financial media and others interested in the meme stock phenomenon, this week has certainly brought plenty to look forward to. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Celsius Holdings, Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Robinhood Markets Stock Quote
Robinhood Markets
HOOD
$9.99 (1.22%) $0.12
GameStop Stock Quote
GameStop
GME
$27.52 (3.46%) $0.92
AMC Entertainment Stock Quote
AMC Entertainment
AMC
$8.17 (%)
Celsius Stock Quote
Celsius
CELH
$117.58 (3.70%) $4.20

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.