Robinhood Markets’ (HOOD) stock slipped in extended trading yesterday and is down in pre-market trading at the time of writing. Artificial intelligence (AI) startup OpenAI dismissed the tokenized shares as not being equity after Robinhood announced their launch at Cannes yesterday. These tokens, or tokenized shares, are linked to pre-IPO companies. Notably, tokens pose an inherent challenge that private companies typically retain the right to buy back these shares from the owner before they can be sold to outsiders.
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Robinhood’s new offering was cheered by investors, sending its shares higher to reach a new 52-week high of $100.88 on July 2. However, OpenAI’s dismissal of a partnership with the trading platform dragged its shares down.
At the same time, HOOD stock may have taken a beating because it missed its chance to be included in the S&P 500 index (SPX). Yesterday, S&P Global announced that software company Datadog would be included in the SPX, replacing the recently acquired Juniper Networks.
OpenAI Warns Investors, ‘Please Be Careful’
OpenAI warned investors to be careful with these tokenized shares, as they do not represent a direct equity stake in the company. Following Robinhood’s announcement, OpenAI clarified its stance in a post on X, saying, “These ‘OpenAI tokens’ are not OpenAI equity.”
The ChatGPT maker also cleared that it is not involved in this launch, has not partnered with Robinhood, and does not endorse the offering. Furthermore, OpenAI mentioned that any potential transfer of equity in the company needs its approval, and that it has not approved any such transfers.
In response, Robinhood clarified that its tokenized offerings are intended to give retail investors indirect exposure and access to private companies. The tokens provide investors with an ownership stake in a special purpose vehicle (SPV) that tracks the performance of private firms. Robinhood has offered to give 5 euros worth of SpaceX and OpenAI tokens to eligible EU investors who register to trade stock tokens before July7. These tokens are not available to U.S. investors due to strict regulatory restrictions.
Is HOOD a Good Stock to Buy Now?
Analysts remain divided on Robinhood Markets’ long-term stock trajectory. On TipRanks, HOOD stock has a Moderate Buy consensus rating based on 12 Buys and five Hold ratings. Also, the average Robinhood Markets price target of $75.31 implies 23.1% downside potential from current levels. Year-to-date, HOOD stock has surged nearly 163%.
