Robinhood, the favorite of retail investors, seeks a $35 billion IPO valuation. Financial market news
Robinhood will now conduct an IPO roadshow and is expected to start meeting with investors this week.
Robinhood Markets Inc. is seeking a valuation of $35 billion in its initial public offering, which is slightly lower than the analyst’s highest forecast because this free trading app is about to debut and may attract buyers from its novice investor base.
According to documents submitted to the US Securities and Exchange Commission on Monday, the company, which is at the center of this year’s meme stock boom, will issue 55 million shares at a price of US$38 to US$42 per share. Bloomberg Information estimated in March that the value of Robinhood could be between 13 billion and 40 billion U.S. dollars.
Robinhood plans to raise more than $2 billion in funding in an initial public offering later this summer. After determining the price range, it will now continue its IPO roadshow and will start meeting with investors this week. Its valuation may still change according to the needs of investors.
As a publicly traded broker, Robinhood will join the cryptocurrency trading platform Coinbase Global Inc., which debuted this year, and industry heavyweight Charles Schwab Corp., which acquired competitor TD Ameritrade last year and has a market value of approximately 130 billion. US dollars.
Robinhood’s IPO plans to raise more than $2.2 billion and will become the fifth largest IPO on the US exchange in 2021. According to compiled data, this year has set a historical record of 648 companies, raising a total of approximately US$218 billion. Bloomberg.
Robinhood became popular during the coronavirus pandemic as young people living at home turned to online transactions to pass the time and make money. Its monthly active users have more than doubled in the past year, reaching 17.7 million as of the first quarter, up from 8.6 million in the same period in 2020.
The Menlo Park, California-based company said it will reserve 20% to 35% of Class A shares for its customers.
Robinhood’s growing popularity has aroused scrutiny by politicians and regulators who are concerned about the so-called gamification of trading and its role in the meme-stock phenomenon. Amid the violent volatility in stocks such as GameStop Corp. in late January, the company had to raise billions of dollars from supporters.
In June, the Financial Industry Regulatory Authority imposed a fine of nearly $70 million on Robinhood, setting a record for a regulatory agency. Finra accused Robinhood of misleading clients in margin trading and lapses in technical supervision and approval of option traders. Robin Hood neither admitted nor denied these claims.
QuickTake: Robinhood, Meme stock and investment game
Robinhood announced in March that it had submitted a private listing application. It disclosed its financial status for the first time in a public document on July 1. The document showed that the company’s 2020 net income was US$959 million and net income was US$7.45 million, compared with US$278 million in the previous year and a loss of 1.07. One hundred million U.S. dollars.
Robinhood’s largest shareholders are venture capital firms DST Global, Index Ventures, New Enterprise Associates, and Ribbit Capital. Each group owns more than 5% of the shares, which triggered the issuance.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading Robinhood products. Its stock is expected to be traded on the Nasdaq stock market under the symbol HOOD.