Robinhood (HOOD) reveals US$1.4B Q1 loss ahead of IPO

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Robinhood (HOOD) reveals US$1.4B Q1 loss ahead of IPO

 Robinhood (HOOD) reveals US$1.4B Q1 loss ahead of IPO
Image source: VideoFlow,Shutterstock

Summary

  • The stock brokerage firm attributed the first-quarter loss to US$3.5 billion debt.
  • Robinhood posted a net income of $7 million in 2020, against a $107 million loss in 2019.
  • The company expects to trade its stock on NASDAQ under the symbol “HOOD”.

Robinhood Markets, Inc. incurred a loss of US$1.4 billion in its first quarter ended March 31, while its revenue soared 309 percent year over year, the company disclosed in its much-anticipated IPO filing.

The stock trading application attributed the loss to a US$1.5 billion change in fair value of convertible notes and warrant liability. In February, Robinhood had offered two tranches of US$3.5 billion convertible notes. The company booked US$53 million in net loss during the first quarter of 2020.

READ MORE: Robinhood raises USD 3.4B to support its burgeoning customer base

However, Robinhood reported total revenue of US$522 million in its first quarter, up from US$128 million in the year-ago quarter. Around 81 percent of the company’s revenue came from payment for order flow related to equities and options trading and transaction rebates concerning cryptocurrency trading.

The company’s net cumulative funded accounts totaled 18 million as of March 31. Average revenues per user jumped to US$137 from US$82.9 in the same quarter previous year.

Over 9.5 million customers traded cryptocurrency worth US$88 billion on Robinhood’s platform during the first quarter and reported cryptocurrency worth around US$12 billion in assets under custody.

Meanwhile, the stock brokerage firm swung to profit in 2020 with a net income of US$7 million. This compares with the net loss of US$107 million in 2019.

Revenue came in at US$ 959 million, up 245 per cent from US$278 million in the previous year. Net funded accounts increased to 12.5 million from 5.1 million in 2018.

READ MORE: The rise of Robinhood in 2020 amid controversies

Source: Pixabay

On June 30, the Financial Industry Regulatory Authority slapped the largest financial penalty of US$70 million on Robinhood for allegedly providing false and misleading information to customers.

Robinhood reserves up to 35 percent IPO stock for customers

According to the company’s IPO filing, it expects to reserve between 20 percent and 35 percent of its class A common stock in the offering to its customers through the IPO Access feature on its platform.

Robinhood expects to trade on NASDAQ under the ticker “HOOD”. Goldman Sachs & Co. LLC, Citigroup and JPMorgan are the lead underwriters for the offering.

READ MORE: China’s DiDi is worth US$68 billion after its Wall Street debut

Please note: The above constitutes a preliminary view, and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.

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