Tesla shares reached an unprecedented intraday high of $ 1,760 on Monday, just as tens of thousands of new investors were entering stocks using online brokerage Robinhood. Robintrack data shows that the number of Robinhood users holding Tesla shares increased from 408,000 at the start of the day on Monday to 458,000 at the end of the day, a jump from 50,000 users.
By Tuesday morning, the shares had returned some of those gains, with the stock trading below $ 1,500.
Robinhood announced Monday that it had raised $ 320 million from investors at a valuation of $ 8.6 billion.
Robinhood stands out from other online brokerage services thanks to zero commissions and the ability to trade a fraction of a share. As a result, the platform has become popular with small hobby investors, especially in recent months, as people have been trapped in their homes by the pandemic.
The result has been some abrupt changes in the prices of some stocks. In early June, for example, daily traders raised Hertz’s stock price nearly 10 times after the company filed for bankruptcy in late May. Buying shares in a bankrupt company is extremely risky because there is a high probability that the bankruptcy process will annihilate shareholders, leaving them with nothing.
Later in June, a 20-year-old Robinhood trader committed suicide, according to his family, because he believed he had accrued $ 730,000 in complex trading options on the platform, although the family says he didn’t really owe much. Robinhood’s founders say they were “devastated by this tragedy” and pledged to make changes to their platform, including a less confusing user interface and better detection of users who want to engage in riskier forms of trading.
