Robinhood Markets Inc. accidentally sold a small stock while on a meme-like trip in December, costing the trading app more than the stock’s current market capitalization, executives revealed Wednesday.
cosmos Health Inc.cosm,
Stocks nearly tripled and experienced record trading volume more than seven times the previous day on December 16, as online traders looking for short companies accused exchanges of not allowing them to sell their shares in the upstream. robinhood Hood,
Executives admitted Wednesday that their trading app actually became part of the frenzy and ended up losing $57 million because of it.
On an earnings call, Robinhood chief executive Vlad Tenev noted a “processing error in a corporate action” that was “really disappointing”, leaving it to chief financial officer Jason Warnick to elaborate.
“A processing error caused us to sell shares short in the market and, while caught quickly, resulted in a loss of $57 million as we bought these shares back in the face of a rising share price,” Warnick said.
When Cosmos Health performed a 1-for-25 reverse stock split that Friday morning in December, just hours after announcing its intentions, the trading portals seemed unprepared. As MarketWatch reported that day, TD Ameritrade publicly told Twitter users that the company had not received the newly issued shares to distribute to its clients as the shares rose. A SCHW of Charles Schwab Corp.,
The spokesperson emailed MarketWatch the following week to say that all distributions were made by the end of the next business day, a Monday.
The stock gains didn’t last until that Monday, though: After peaking at $23.84 the day Robinhood was apparently buying, they lost it all in after-hours trading and fell further after Cosmos Health announced a stock offering.
Shares closed Wednesday at $5.04, giving Cosmos Health a market capitalization of about $53 million, according to FactSet, less than what Robinhood executives said they lost in the Dec. 16 trades. .
Robinhood shares rose on Wednesday after the trading app reported a fourth-quarter glitch, but said the company would seek to buy back shares sold from disgraced cryptocurrency exchange founder Sam Bankman-Fried and executives would forfeit $500 million. in actions. compensation. Robinhood shares have declined 21.8% in the past 12 months, as the S&P 500 SPX Index,
has dropped 8.9%.