The popular trading app’s muted debut on the Nasdaq Composite Index comes months after it was caught in a confrontation between a new generation of retail investors and Wall Street hedge funds.

Shares of Robinhood Markets Inc fell more than 10 percent after opening flat in their debut on the Nasdaq Composite Index on Thursday, valuing the online brokerage at about $28bn, a dismal reception to one of the most hotly anticipated listings of the year.

Shares fell to $34 in early trading, far lower than the offer price of $38, which was already on the lower end of Robinhood’s initial price offering (IPO) range.

The company — arguably the breakout financial technology startup of its generation — priced its IPO on Wednesday and raised $2.1bn.

Its long-awaited debut comes months after it was caught in a confrontation between a new generation of retail investors and Wall Street hedge funds.

Its decision earlier this year to restrict trading in a few popular stocks following a tenfold rise in deposit requirements at its clearinghouse had enraged the United States lawmakers as well as users of its app, a go-to destination for retail investors.

Its easy-to-use interface made it a hit among young investors trading from home during coronavirus-induced restrictions and its popularity has soared over the past 18 months.

But Jeff Zell, senior research analyst at IPO Boutique, said there were more sceptics than believers for the firm at this valuation level.

“With that being said, there is a silver lining to this performance, or underperformance, as it sets the ‘expectations’ on the lower end of the scale for Robinhood when it reports its first few quarters,” Zell said.

“But overall, the company still has a lot to prove,” he added.

Robinhood’s revenue in the March quarter jumped fourfold, thanks to the trading mania in the so-called meme stocks. But it also came at a cost, putting it at the centre of several regulatory probes.

The company was forced to raise $3.4bn in emergency funds after its finances were strained due to the massive jump in retail trading.

Robinhood was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. The two will hold a majority of the voting power, with Bhatt keeping around 39 percent of the outstanding stock and Tenev about 26.2 percent.

The company had planned to reserve 20 percent to 35 percent of its offering for users of its trading platform that allows investors to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies.

Robinhood Chief Financial Officer Jason Warnick told Reuters he expects the IPO to demonstrate the benefits of allocating a significant chunk of stock to retail investors.

The company disclosed on Tuesday that it has received inquiries from US watchdogs asking if employees traded GameStop Corp and AMC Entertainment before the online broker publicly announced it was restricting trading in those and other meme stocks on January 28.

The company is also being probed over whether it complied with personnel registration rules, it said.

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