Robinhood is planning to release 55 million shares in the open market as it plans to reserve 20% to 35% of Class A shares for its customers.
Zero-commission investment app Robinhood Market has put forwards the terms for its Initial Public Offering (IPO). The popular trading app is willing to raise more than $2 billion USD through the IPO expected later this summer.
On Monday, July 19, Robinhood submitted its filing to the US Securities and Exchange Commission (SEC) stating that it will market 55 million shares in the price band of $38 to $42. At the top price band of $42, the trading app company will peg a valuation of $35 billion.
By putting its price range, the company has put forwards its IPO roadmap. The company officials will soon start meeting investors this week. The valuation can change depending on the demand from investors. As Robinhood plans to raise $2.2 billion, the IPO would be the fifth-biggest on a US exchange for the year 2021. So far this year, over 648 companies have raised a total of $218 billion. Robinhood said that it will reserve 20% to 35% of Class A shares for its customers.
Robinhood’s popularity skyrocketed during the Coronavirus pandemic as a lot of young people joined the market during this time. Over the last year, its monthly active users have more than doubled. During Q1 2021, Robinhood had 17.7 million users up from 8.6 million during Q1 2020.
Robinhood and Increased Regulatory Scrutiny before Its IPO
Founded in 2013, this Menlo Park, California-based company has been in the news and regulatory scrutiny recently. Robinhood’s actions during the GameStop rally and the rising customer fury have put it under the regulatory limelight.
In June 2021, the Financial Industry Regulatory Authority slapped USD 70 million on Robinhood. On the other hand, FINRA also alleged that Robinhood also misled its customers about margin trading. Besides, it also accused the trading app company of lapses in its monitoring of technology and approvals for options traders.
Earlier in March 2021, Robinhood announced that it has filed confidentially to go public. Earlier this month on July 1, the company disclosed its financials for the first time. Last year in 2020, Robinhood reported net revenue of US$959 million with a net income of US$7.45 million.
Some of the top investors in Robinhood include Index Ventures, DST Global, Ribbit Capital, and New Enterprise Associates. Each of these players has more than a 5 percent stake in the Menlo Park-based firm. The Robinhood shares will trade on the Nasdaq Stock Exchange with a ticker symbol of HOOD.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.