Robinhood has had a turbulent year with an influx of new traders joining the platform, and despite a tarnished reputation, has plans to go public.
Robinhood Markets, Inc. is an American financial services company headquartered in Menlo Park, California. It was founded in 2013 by Vladimir Tenev and Baiju Bhatt with a mission to “democratize investing for all”. It has built a user-friendly platform to give people access to the financial markets with commission-free trading via a mobile app.
Robinhood filed a confidential S-1 filing with the Securities and Exchange Commission (SEC), meaning that the public will not be able to view it until 15 days before the initial public offering (IPO) and is advised by investment bank Goldman Sachs. Companies often file confidentially to reduce factors that could adversely affect their valuation prior to launching a public prospectus.
When can I buy Robinhood stock?
According to a Robinhood blog post, the IPO will take place after the SEC completes its review process and subject to market conditions. Robinhood will likely go public in Q2 2021.
What is Robinhood’s IPO price?
The number of shares to be offered and the price range are yet to be determined.
What is Robinhood’s ticker symbol?
Robinhood will trade under the ticker symbol ‘HOOD’ and is expected to list on the NASDAQ exchange.
The numbers behind Robinhoods’s IPO
Due to the confidential S-1 filing, the numbers behind Robinhood remain unknown. However, in recent private funding rounds in August and September 2020, it raised $200 million and $660 million, respectively. In the latter round of funding, it valued the company at $11.7 billion. After the recent Gamestop saga, it also drew down $3.4 billion in convertible debt to cope with liquidity issues. Bids on shares on the secondary market have valued the company as high as $40 billion.
Robinhood has been at the forefront of the rise in retail investing in recent times and had 13 million users at the end of 2020 with an average age of 31. The number of users continues to grow, adding another 6 million in the first two months of 2021.
Should I buy Robinhood stock?
There is a lot of unknowns regarding the business and its financials which will come to light in the coming weeks and months.
The firm’s reputation has been adversely affected after the Gamestop fiasco, where retail investors bought up large amounts of the stock, causing a ‘short squeeze’. Robinhood subsequently halted trading in many ‘meme’ stocks, which angered investors and led to a backlash, with many users giving it 1 star on the App Store. On top of this, Robinhood CEO Tenev was also brought before Congress to testify on the matter, with the business model also coming under scrutiny.
Many startups experience growing pains, and the recent saga may be just that. Despite this, it is clear that Robinhood continues to grow its user base but will need to continue to attract new users. It faces increasing competition in the space with large players such as Morgan Stanley acquiring E-Trade. There are several smaller players, such as Chinese-backed WeBull and Revolut, to name a few.
There are a number of concerns surrounding the business, but Robinhood appears to have experienced some impressive growth. At MyWallSt, we prefer to wait 2 quarters prior to investing, and currently, with no access to the S-1 filing, it is too early to make a decision.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.