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Robinhood Falls in Trading Debut Closes 8.4% Lower at $34.82 Per Share



Robinhood Markets Inc - Investors King

The investing app tumbled in its highly anticipated trading debut on Thursday, closing 8.4 percent below its initial public offering price.

Robinhood stock opened at $38, matching the IPO price, and quickly fell more than 10 percent. The stock later climbed to approach the IPO price before falling again in the final hour of trading to close at $34.82, Robinhood’s market capitalization was about $29 billion.

It was a disappointing debut for the company that brought the markets to the masses. Robinhood and its bankers tried to avoid a poor first-day performance by pricing shares at the bottom of its targeted range at a value of about $32 billion. A successful first day was the more important because Robinhood sold a big chunk of its shares to its own customers.

According to people familiar with the matter, breaking the Wall Street convention of giving individual investors only a minuscule slice of hot IPOs, Robinhood sold between 20 percent and 25 percent of its offering to its customers.

“One of our company values is ‘participation is power,’” Chief Executive Vlad Tenev said in an interview. “It didn’t seem right for us that IPOs had typically been reserved for the top 1 percent.”

Trading for the first time under the ticker HOOD, the online brokerage hit the public markets it seeks to democratize for amateur investors.

Robinhood, whose stock trading app has surged in popularity among retail investors is valued at 10.5 times forward EBITDA.

The company sold 52.4 million shares, raising close to $2 billion. Co-founders Vlad Tenev and Baiju Bhatt each sold about $50 million worth of stock. The company was last valued in the private markets in September at $11.7 billion.

Goldman Sachs and JPMorgan Chase are the investment banks that led the deal. Underwriters will have an option to buy an additional 5.5 million shares.

Unlike many recent IPOs, Robinhood was profitable last year, generating a net income of $7.45 million on net revenue of $959 million in 2020, versus a loss of $107 million on revenue of $278 million in 2019.

However, the brokerage had a loss of $1.4 billion in the first quarter of 2021 tied to emergency fundraising-related losses during January’s GameStop trading mania. The company generated $522 million in revenue in the quarter, up 309 percent from the $128 million earned a year earlier.

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A Challenging Bond Auction for the DMO – Coronation Merchant Bank

The DMO held its monthly auction of FGN bonds yesterday. It offered N225bn but raised N200.9bn (USD466.5m) through re-openings of the 2025, 2032 and 2042 FGN bonds.



Bonds- Investors King

The DMO held its monthly auction of FGN bonds yesterday. It offered N225bn but raised N200.9bn (USD466.5m) through re-openings of the 2025, 2032 and 2042 FGN bonds.

The participation level was higher when compared to the auction held in July. However, total subscriptions remained lower when compared with the average of the first six months of 2022. The DMO secured a total bid of N247.1bn (USD574.6m) at the bond auction held yesterday.

The bids for the 3, 10 and 20-year benchmarks were allotted at the marginal rates of 12.5% (previously; 11.0%), 13.5% (previously; 13.0%) and 14.0% (previously; 13.7%) respectively.

The relatively low demand at the auction mirrors tight system liquidity. We note that market liquidity stood at a deficit of -N3.6bn on Friday (12 August ‘22). Overnight and repo rates closed within a range of 12 – 15%. The tightness in system liquidity can be partly attributed to CBN’s continuous use of the discretionary cash reserve ratio (CRR) debits.

We suspect that the negative real interest rates given the elevated inflation figure has contributed to investors’ apathy towards FGN bond yields. The latest inflation report released by the NBS shows July’s headline inflation increased by 104bps (when compared with the previous month) to 19.64% y/y. This is the highest reading since 2005.

Meanwhile, average yield in the secondary market for FGN bonds is 12.7% (as at 16 August ’22). The CBN’s in-house estimates suggest that inflation is likely to remain considerably high, partly due to the build-up of increased spending related to the 2023 general elections.

The monetary policy committee (MPC) believes that further tightening would help moderate worsening inflationary trend and narrow the real interest rate gap. The MPC/CBN raised the policy rate by 100bps from 13% to 14% in July ‘22. However, given the upward trend in inflation, expectations of another rate hike is not far-fetched.

The DMO had set out to raise a maximum of N1.9trn by end -Q3 ’22. However, year-todate, it has raised N2.1trn. exceeding its target by 12% or N220bn. Given that the debt management office is expected to offer instruments worth N221 – 240bn through reopenings of the 13.53% FGN MAR 2025, 12.50% FGN APR 2032 and 13.00% FGN JAN 2042 bonds in September, the DMO is likely to exceed its borrowing target for FGN bonds by end -Q3 ’22.

Allowing for the smaller amounts which the FGN raises from the sale of other debt instruments such as NTBs and savings bonds, DMO is on track pro rata to meet or exceed the domestic borrowing target for the year set at N3.53trn.

The FGN was unable to meet its revenue target for Jan – Apr 2022, it underperformed by 51%. FGN’s retained revenue stood at N1.63trn, compared to the prorate target of N3.32trn. Debt service (N1.94trn) accounted for 119% of the FGN’s revenue in April ‘22.

In the near term, we expect increased borrowing (via FGN bonds) to result in an uptick in yields across the curve. We see mid-curve FGN bond yields around 12.0 – 13.5% and yields at the longer-end of the curve between 13.25% – 14.25% over the next one month.

However, the level of system liquidity (impacted by items such as auctions, CRR debits/refunds, bond/NTB maturities, coupon payments and FAAC allocation) would also influence movement in yields.

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Nigerian Exchange Limited

Stock Market Extends Decline as Inflation Rises to 17-Year High in Nigeria

The Nigerian Exchange Limited (NGX) shed 0.07% on Monday after the NBS report showed inflation rose to a 17-year



Nigerian Stock Exchange - Investors King

The Nigerian Exchange Limited (NGX) shed 0.07% on Monday after the National Bureau of Statistics (NBS) report showed inflation rose to a 17-year in Africa’s largest economy in the month of July.

Nigeria’s inflation expanded by 19.64% in July, the highest since September 2005. The persistent increase in prices despite efforts by the central bank to rein in prices and deepen economic productivity forced many investors to start closing their open positions.

The market capitalisation of listed equities declined by another N19 billion to N26.769 trillion following a N571 billion decline recorded last week.

Similarly, NGX All-Share Index lost another 0.07% to close at 49,629.43 index points, this was in addition to 1,058.26 index points or 2.09% depreciation suffered last week.

Investors transacted 210,835,728 shares worth N2.188 billion in 4,122 transactions during the trading hours of Monday, representing a 71.90% decline from 750,285,275 shares that exchanged hands on Friday. E-Transact and financial services stocks were the most traded stocks on Monday as shown below.

A critical look into each sector showed the banking sector gained 15 basis points (bps) on a 4.65% appreciation in the values of Unity Bank, 2.12% gain in Zenith Bank and 0.33% improvement in Fidelity Bank. Jaiz Bank, UBA and Sterling Bank closed in the red.

The industrial index appreciated by 17bps. While consumer goods and oil and gas declined 33bps and 3bps, respectively.

The Exchange year to date declined further to 16.18%. See the details of top gainers and losers below.

Top Gainers

Symbols Last Close Current Change %Change
NEIMETH N 1.40 N 1.53 0.13 9.29 %
UNITYBNK N 0.43 N 0.45 0.02 4.65 %
FCMB N 3.35 N 3.49 0.14 4.18 %
ZENITHBANK N 21.25 N 21.70 0.45 2.12 %
TRANSCORP N 1.07 N 1.08 0.01 0.93 %

Top Losers 

Symbols Last Close Current Change %Change
PRESCO N 158.40 N 142.60 -15.80 -9.97 %
MULTIVERSE N 2.44 N 2.25 -0.19 -7.79 %
IKEJAHOTEL N 1.27 N 1.20 -0.07 -5.51 %
DANGSUGAR N 16.70 N 16.00 -0.70 -4.19 %
JAIZBANK N 0.91 N 0.88 -0.03 -3.30 %

Top Trade

Symbols Volume Value
ETRANZACT 52551673.00 119835326.82
FBNH 23082685.00 249782076.95
UBA 21896502.00 153480014.60
GTCO 15517148.00 315918097.65
TRANSCORP 12741555.00 13710597.18

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Stock Market

Stock Investors Lose N571 Billion Last Week

Investors traded 1.511 billion shares worth N13.547 billion in 20,074 deals last week



Nigerian Exchange Limited - Investors King

Investors in the Nigerian stock market lost N571 billion last week as investors continue to close their positions amid growing economic uncertainty and high borrowing cost.

Investors traded 1.511 billion shares worth N13.547 billion in 20,074 deals last week, against a total of 705.636 million shares valued at N12.850 billion that exchanged hands in 22,124 deals in the previous week.

Analysing activity across key sectors, the Financial Services Industry led the activity chart with 680.202 million shares valued at N4.672 billion traded in 9,230 deals. Therefore, contributing 45.02% and 34.48% to the total equity turnover volume and value, respectively.

The Services Industry followed with 499.178 million shares worth N3.407 billion in 866 deals. In third place was
the ICT Industry, with a turnover of 113.804 million shares worth N2.246 billion in 2,083 deals.

Capital Hotel Plc, FBN Holdings Plc and Jaiz Bank Plc were the three most traded equities. Together, the three accounted for 763.836 million shares worth N5.130 billion that were traded in 1,025 deals and contributed 50.55% and 37.87% to the total equity turnover volume and value, respectively.

The NGX All-Share Index depreciated by 1,058.26 index points or 2.09% to 49,664.07 index points from 50,722.33 index points it closed in the previous week.

Market capitalization depreciated by 2.09% or N571 billion to N26.787 trillion last week, down from N27.358 trillion it settled in the previous week.

Similarly, all other indices finished lower with the exception of  The NGX Insurance, NGX Consumer Goods and NGX Growth Indices which appreciated by 6.00%, 3.00% and 1.56% while, The NGX ASeM index closed flat.

Thirty-three equities appreciated in price during the week, lower than forty-one equities in the previous week. Twenty- six equities depreciated in price higher than Twenty-two in the previous week, while ninety-seven equities remained unchanged higher than ninety-three equities recorded in the previous week.

The Exchange year-to-date return declined to 16.26%. See the details of top gainers and losers below.

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