Robinhood initial public offering targets $35B valuation
Shares will trade under ticker symbol HOOD
Robinhood worried about post-COVID drop in business
Charlie Gasperino joins 'The Claman Countdown' to discuss Robinhood's 20 billion dollar IPO
Robinhood Markets Inc. is seeking a valuation of up to $35 billion as it prepares for one of the most-anticipated initial public offerings of the year.
The Menlo Park, Calif.-based trading app developer plans to sell up to 55 million shares at a price between $38 and $42 apiece. The IPO would raise about $2.3 billion at the high end of the range.
Almost 2.63 million shares being sold are owned by Robinhood’s founders and chief financial officer, and proceeds from those sales will not be awarded to the company.
Shares will trade on the Nasdaq under the ticker symbol HOOD.
Robinhood, which allows users to trade U.S.-listed stocks, related options and American depositary receipts, as well as cryptocurrencies, saw business boom during the coronavirus pandemic as government stimulus checks and COVID-19 lockdowns gave Americans the chance to focus on their investments.
The number of monthly active users rose 106% year over year to 17.7 million at the end of the first quarter. The company has said it plans to reserve up to 30% of its IPO for its customers.
Robinhood paid a record $70 million fine in June to settle Financial Industry Regulatory Authority allegations that the company misled investors about margin trading and was lax in its oversight of approvals for options traders. The company neither admitted nor denied wrongdoing.
Five months earlier, Robinhood was forced to restrict trading in some highly volatile securities as a surge in volume strained its abilities to cover clearinghouse deposit requirements. The company was forced to raise $4 billion from early investors in order to meet the requirements.
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Total revenue in the three months ended March 31 soared 309% year over year to $522 million. The company booked a $1.4 billion loss, which included a $1.5 billion fair value adjustment to its convertible notes.
For 2020, Robinhood’s revenue surged 245% year over year to $959 million. Net income was $7 million, up from a $107 million loss the year prior.