Robinhood app, which allows investors to trade in the stock market and cryptocurrencies, got listed in NASDAQ a week ago with an initial public offering (IPO) of $38 per share.
On the very same day of its debut, Robinhood shares plunged more than 24% during the day's trade and ended with -8% at the closing bell making a mockery of itself for not sustaining despite being among the top trading apps in the financial sector for eight years.
Robinhood, which is listed as HOOD in the indices, mostly traded below its IPO price and only rose above the price this week and currently stands at $50.97 per share. However, investors believe it might have reached its all-time high of 2021 already and the stock is poised to fall sharply.
Data shows that HOOD is a hot selling stock among short sellers and more than 12.5 million shares were shorted on August 4, 2021, which is roughly 25% of the entire days investment.
The short sellers are confident that Robinhood cannot sustain itself in the stock market and are betting against it, making good returns as it falls.
Also, short sellers are confident of making money with HOOD in day trades as the stock shows high volatility giving them enough space to decide when to short after its reaches it days all time high.
''With price volatility comes more long-buying and short-selling action,'' said Ihor Dusaniwsky of S3 Partners to the New York Post, adding that the bears have kept their eyes on HOOD and long term investors need to be in knowledge of that fact.
The new data hints that institutions and retail traders are banding together to make Robinhood their next short selling target and make millions in each days trade.
With continued short selling, a stock becomes stunted for growth and mostly remains stagnant swinging mostly only towards the dipping side.
The same happened with Game Stop stocks where hedge funds were shorting it almost everyday for years and were suddenly taken aback when a bunch of Reddit users banded together by investing millions into it making it rise more than $100 in the days trade.
Hedge funds reportedly lost billions in the day's trade and urged officials to regulate and block the accounts of people who got in the trade. However, hedge funds were shown the mirror on that fateful day, claiming they've been doing what the 'newcomers' did for years without being questioned.