Robinhood stock declined by 1.3% on Monday following reports that SpaceX may cut the brokerage from its historic $75 billion IPO plans. With Morgan Stanley’s E*TRADE now the frontrunner to handle retail allocations, Robinhood risks losing a significant growth opportunity, contributing to an 8% stock slide over the past week.
Robinhood stock fell as reports suggested it may lose its role in SpaceX’s IPO plans. The uncertainty threatens its position in what could become the largest IPO in history.
According to a Reuters report, SpaceX is reconsidering brokerage partners for retail share distribution. Robinhood and SoFi may be removed as Morgan Stanley’s E*TRADE reportedly emerges as the likely partner.
Morgan Stanley is already the lead underwriter for the SpaceX IPO. The IPO is expected to raise up to $75 billion at a valuation of $1.75 trillion.
HOOD stock was trading at approximately $65 at the time of writing. Data from TradingView indicates that HOOD has experienced significant weakness in price across recent trading sessions.
Since March 25th, the HOOD stock has fallen by over 8%. Both the loss of the opportunity for HOOD to participate in a large-scale IPO and ongoing downward pressure in the cryptocurrency market appear to be contributing factors for this recent decline.
For many retail investors, accessing shares via IPO allocations is a primary source of income for brokerage firms. As part of an effort to allocate up to 30% of its shares to retail investors, SpaceX had contemplated partnering with Robinhood.
This likely switch to E*TRADE further solidifies competitive positioning within the brokerage industry. ETRADE benefits from strong ties with Morgan Stanley, which is already involved in a segment of the deal.
HOOD’s stock performance is also impacted by current events within the crypto market. The decrease in overall trading volume throughout this market impacts HOOD’s platform revenue potential.
Losing access to SpaceX’s IPO could weaken Robinhood’s growth outlook and reduce key revenue opportunities. Analysts are assessing whether HOOD can identify and secure other avenues of growth.
