Robinhood aims to raise more than $2 billion in upcoming IPO

At top of range, Robinhood would have a market value of about US$35 billion based on outstanding shares listed in filings

The trading app company at the centre of this year’s meme stock frenzy said in a filing Monday with the U.S. Securities and Exchange Commission that it will market 55 million shares for US$38 to US$42 each.

At the top of that range, Robinhood would have a market value of about US$35 billion based on the outstanding shares listed in its filings.

By setting a price range, the company has now launched its IPO roadshow and will start meeting with investors this week. Its valuation could still change depending on demand from investors.

With plans to raise more than US$2.2 billion, the IPO would be the fifth biggest on a U.S. exchange this year, which has already set an all-time record with 648 companies raising a total of about US$218 billion, according to data compiled by Bloomberg.

Robinhood’s appeal caught on during the coronavirus pandemic as homebound young people turned to online trading to pass the time and make money. Its monthly active users have more than doubled in the past year, with 17.7 million as of the first quarter, up from 8.6 million in the same period last year.

The Menlo Park, California-based company has said it will reserve 20 per cent to 35 per cent of its Class A shares for its customers.

Its increased popularity led to scrutiny from politicians and regulators, who are focused on the so-called gamification of trading and the company’s role in the meme-stock phenomenon. At the height of the volatile late January frenzy over stocks like GameStop Corp., Robinhood had to raise billions of dollars from its backers.

In June, the Financial Industry Regulatory Authority imposed a nearly US$70-million fine on Robinhood, a record for the watchdog. Finra alleged Robinhood misled its customers about margin trading and lapsed in its oversight of technology and approvals for options traders. Robinhood neither admitted nor denied the claims.

 

Robinhood announced in March that it had filed confidentially to go public. Its public filing on July 1 disclosed its financials for the first time. The company said it generated net income of US$7.45 million on net revenue of US$959 million in 2020, compared with a loss of US$107 million on US$278 million the previous year.

Robinhood’s top shareholders are venture firms DST Global, Index Ventures, New Enterprise Associates and Ribbit Capital. Each group owns more than 5 per cent of Robinhood stock leading into the offering.

Robinhood’s offering is being led by Goldman Sachs Group Inc. and JPMorgan Chase & Co. Its shares are expected to trade on the Nasdaq Stock Market under the symbol HOOD.

Robinhood’s shares are expected to trade on the Nasdaq Stock Market under the symbol HOOD.

Financial Post