Robinhood has had a turbulent 12 months but the trading app is still thriving and is now going public despite a tarnished reputation.
Robinhood Markets Inc is a financial service platform that was founded in 2013 with a mission to “democratize investing for all”. It has built a user-friendly service to give people access to the financial markets via a commission-free trading mobile app. The app surged in popularity during the pandemic when new users began to invest their stimulus checks in the stock market.
To name a few of Robinhood’s controversies, in the past year, it has been subject to a congressional grilling and was involved in a trading outage scandal which resulted in a massive customer backlash. Robinhood has also had feuds with two of the world’s most famous investors, Warren Buffett and Charlie Munger, and was blamed for the death of a young man who lost all of his money trading on the app.
Following the company’s S-1 filing on July 1, we have a good idea of where the company stands ahead of its long-awaited market debut.
When can I buy Robinhood stock?
With its recently published S-1 filing, it’s likely that Robinhood will go public within the next month, though a date has yet to be confirmed.
What is Robinhood’s IPO price?
The number of shares to be offered and their price range are yet to be confirmed, although the company has confirmed that it will be reserving 20%-35% of shares to be sold to its own customers.
What is Robinhood’s ticker symbol?
Robinhood will trade under the ticker symbol ‘HOOD’ on the NASDAQ exchange.
We know from its filing that Robinhood is seeking a $40 billion valuation, and hopes to raise $100 million in its IPO.
It generated revenue of $959 million in 2020, up 245% year-over-year (YoY). It turned a $7.5 million profit last year, compared to a $106.6 million loss a year prior.
After the recent GameStop saga, it also drew down $3.4 billion in convertible debt to cope with liquidity issues.
How many users does Robinhood have?
It manages more than $80 billion for some 18 million users on its platform.
Robinhood has been at the forefront of the rise in retail investing in recent times and during the GameStop saga, the app experienced eye-popping user growth with 600,000 people downloading it in a single day. According to JMP Securities, Robinhood added 3 million users in January.
Some more of Robinhood’s key figures:
- Robinhood brought in $682 million in payment-for-order-flow revenue in 2020, up 514% year-over-year.
- The app added $3.4 billion to its balance sheet during the GameStop short-squeeze even after it suspended trades for a week.
- In the first two months of 2021, Robinhood has seen six million new cryptocurrency traders on its platform.
Should I buy Robinhood stock?
Analysts believe that Robinhood’s growth could stall if the stock market enters into a bear cycle given that many of its young users only know a bull market.
Robinhood will need to continue to attract new users as it faces increasing rivalry in the space with large players, including Morgan Stanley, who acquired E-Trade. Chinese-backed WeBull and Revolut have also started offering trading services. The company also faces crypto competition from big players like PayPal and Coinbase.
There are a number of concerns surrounding the business, but Robinhood appears to have experienced some impressive growth. While it may be difficult to count Robinhood’s list of recent challenges on one hand, the company is still on target to offer a multibillion-dollar IPO.
However, be aware that it is likely to be one of the most volatile IPOs in living memory.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.