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Summary
- Robinhood (HOOD) eyes a US$35 billion valuation after IPO next week.
- Founders Baiju Bhatt and Vladimir Tenev will hold 26.2% and 39.0% of the voting power of the outstanding shares, respectively.
- HOOD’s monthly active users are 17.7 million, and more than 50% of its customers are first-time investors.
Financial services company Robinhood Markets Inc. has applied for an initial public offering (IPO) on the Nasdaq Global Select Market, with the ticker “HOOD”.
The expected IPO date is July 28, 2021. It is expecting a US$35 billion valuation in its initial public offering. Earlier, it was aiming for a valuation of up to US$40 billion, according to Reuters.
In its latest filing on July 19, the company announced to offer 55,000,000 shares of Class A common stock. The IPO price range is between US$38.00 to US$42.00 per share for raising around US$2.3 billion.
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After the IPO, its founders Baiju Bhatt and Vladimir Tenev will hold approximately 26.2% and 39.0% of the voting power of outstanding shares, respectively.
The company’s Class A common stock outstanding after this offering will be 703,868,056. The shareholder share offered is 262,5000. Its Class B common stock outstanding after the offer will be 131,807,224 shares. HOOD’s 35% of IPO shares are for retail traders.
The underwriters will have a choice to buy extra 5,500,000 shares to cover over-allotment.
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Source: Pixabay
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Robinhood Inc. was founded in 2013 to “democratize finance”. It offers a platform for commission-free trading that has been well-received by young investors. Its platform is cloud-based and built to keep up with the mobile-first fast-growing financial demands.
The company reported 2100 employees as of March 31, 2021. Its monthly active users are 17.7 million, and more than 50% of its customers are first-time investors.
Its total revenue grew by 245% in FY 2020 to US$959 million compared to US$278 million in FY 2019. Its net income also rose to US$7 million in FY 2020 against the net loss of US$107 in FY 2019.
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For the first quarter ended March 31, 2021, its total revenue grew by 309% year-over-year to US$522 million from US$128 million. For the March quarter, it booked a net loss of US$1.4 billion compared to a net loss of US$53 million for the same quarter a year ago. The losses were mainly on account of fair value adjustment to convertible notes and warranty liability.
The GameStop mania had created trouble for Robinhood. It had to raise emergency funds in February to meet clearing house obligations. In addition, Robinhood had faced a penalty of US$70 million from FINRA in June for “causing harm to customers”, according to the Financial Times.
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Goldman Sachs, J.P. Morgan, and Citigroup are the underwriters.
Robinhood will host a public event on July 24 to answer the IPO-related questions, Reuters reported.
Please note: The above constitutes a preliminary view, and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.
