Robinhood Aims for $35 Billion Market Valuation in Upcoming IPO – Bitcoin News


Bitcoin News 20 July, 2021 - 02:07pm 4 views

Is Robinhood going public?

Robinhood Is Going Public Next Week. It Is Seeking a $35 Billion Valuation. Robinhood Markets, the zero-commission investment app, will list its shares next week. Barron'sWhen Does Robinhood Go Public? The Latest News on Its IPO.

by Sergio Goschenko

Robinhood, the fee-free, trade-it-all exchange, is aiming to achieve a valuation as high as $35 billion in its upcoming IPO, according to an amended prospectus filed with the SEC on Monday. The exchange, which is reportedly going public as soon as the next week, expects to sell about 55 million shares in its IPO to raise more than $2.3 billion in the process, with a share price in the range of $38 to $42.

The exchange, whose self-imposed mission is to democratize access to investment products, reached a valuation of $11.7 billion last September. At the time, Robinhood raised $460 million in an extension of its Series G funding round, with the participation of Andreessen Horowitz, Sequoia, DST Global, Ribbit Capital, 9Yards Capital, and D1 Capital Partners.

Robinhood had a very strong first quarter, fueled by an increase in trading interest due to Covid-19 and other factors. During that quarter, it produced $522 million in revenue, also aided by cryptocurrency-related trades, with the rise of dogecoin being a significant factor.

Robinhood was one of the companies that took advantage of the cryptocurrency trading madness earlier this year. The company revealed in its IPO filing that more than 9.5 million customers used its platform to trade $88 billion in cryptocurrency. The doge-mania that affected the market also benefited Robinhood. In the same filing, the company revealed that more than a third of its Q1 crypto revenue was attributable to dogecoin.

This boom in its cryptocurrency-based business has also raised worries from regulators. Earlier this month, the SEC delayed Robinhood’s IPO due to concerns related to the crypto section of Robinhood’s business model. While the specifics of this delay are unclear, it shows cryptocurrency is in the sights of regulators, perhaps even more so with a company like Robinhood going public.

Robinhood has also faced criticism for its actions amidst the GameStop stock mania when it limited stock purchases for traders due to increased volatility. At the time, Vlad Tenev, Robinhood’s CEO, stated the situation was ‘unacceptable,’ and stressed they were doing everything in their power for that situation to not happen again.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Reports from South Africa suggest that tax authorities have plugged a loophole on the online tax filing system that enabled crypto arbitrage traders to make several purchases on overseas cryptocurrency platforms using just one approval. As a consequence of these ... read more.

Reports from South Africa suggest that tax authorities have plugged a loophole on the online tax filing system that enabled crypto arbitrage traders to make several purchases on overseas cryptocurrency platforms using just one approval. As a consequence of these ... read more.

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Robinhood targets July 29 debut as a public company

CNN 21 July, 2021 - 12:00pm

Updated 1:57 PM ET, Tue July 20, 2021

Share trading app Robinhood pursues $35bn valuation in stock market debut

This is Money 21 July, 2021 - 12:00pm

By Harry Wise For This Is Money

Online trading platform Robinhood is hoping to be valued at up to $35billion when it floats on the Nasdaq Stock Exchange.

In an updated prospectus yesterday, the group revealed that it intends to raise about $2.3billion from offering 55 million shares at between $38 to $42 each to investors in what is set to be one of the most hotly-anticipated listings this year.

Founders and chief executives Vladimir Tenev and Baiju Bhatt and chief financial officer Jason Warnick will put more than 2.6million shares on the market but will still hold about two-thirds of the voting power following the initial public offering (IPO). 

Financial powerhouse: Headquartered in the heart of Silicon Valley, Robinhood is well-known for offering zero-commission trading in stocks, cryptocurrencies, and exchange-traded funds

The company's filing also showed that the investment arm of cloud-based software company Salesforce is looking to buy up to $150million worth of stock in the IPO, whose lead underwriters are Goldman Sachs and JP Morgan.

In a separate statement, Robinhood said it would host a public event on July 24 to present its IPO plans and answer questions from potential investors. This is akin to traditional roadshows, which companies and their advisers host with professional investment firms in the run-up to a share offering. 

Tenev and Bhatt founded the company eight years ago with the aim to 'democratise finance for all.' It has a massive following among millennials and 'Generation Z' investors, with the median age of its users being 31.

Headquartered in Menlo Park in the heart of Silicon Valley, Robinhood is well-known for offering zero-commission trading in stocks, cryptocurrencies, and exchange-traded funds. The company was also a pioneer in fractional share trading.   

From 2015 to 2019, the number of funded accounts on its platform grew by around tenfold to 5million, but its user base soared when the Covid-19 pandemic started, and the markets took a dive.

According to its IPO prospectus, its total accounts accelerated to around 31million as of March this year. Half of that increase came just in the first three months of 2021, when the trading mania in the so-called meme stocks took off.

Youthful base: Vladimir Tenev (pictured) co-founded Robinhood with Baiju Bhatt in 2013. The pair's firm has a massive following among millennials and 'Generation Z' investors

This helped propel a fourfold increase in first-quarter revenues to $522million, but the quick expansion has come at a cost for the group, which has been at the centre of numerous scandals in recent years.

In January, the company received criticism when it halted trading in shares of video game retailer GameStop, AMC and other firms whose prices were being driven sky-high by social-media-led buying by thousands of retail investors.

At the time, Robinhood was forced to raise $3.4billion in emergency funds after its finances were strained by the massive jump in retail trading and a resulting jump in capital demands from clearing houses.

Last year, it also reached a $65million civil settlement with the US Securities and Exchanges Commission (SEC) over concerns that it misled customers about how it made money and the quality of its services. The business neither admitted nor denied the regulator's accusations.

Further criticism has come from its use of 'payment for order flow,' a practice that directs orders through a series of market-making firms and through which Robinhood makes most of its money.

Robinhood's stock market flotation comes amid a record 15-month run for the US IPO market, as investors rushed to buy shares of high-growth tech companies such as cryptocurrency exchange platform Coinbase.  

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Robinhood seeks $35B market valuation ahead of IPO next week

CNBC Television 21 July, 2021 - 12:00pm

Robinhood's appeal to retail does not level the playing field

GlobalCapital 21 July, 2021 - 12:00pm

Copying and distributing are prohibited without permission of the publisher.

Robinhood's mission to democratise stock markets is taking its inevitable next step with its own initial public offering, of which it says it will sell between 20% to 35% to retail investors. But while opening up the IPO investor base beyond the institutional investor clique sounds good in theory, such transactions remain extremely risky for retail investors.

Robinhood has indisputibly revolutionised retail investing in the US, opening the door for unprecedented numbers of people to engage in no fee trading of individual shares and much more besides. The retail investing boom helped spur US markets to new highs in the shadow of the Covid-19 pandemic and may even have preserved the value of some troubled stocks.

Now, through a recently launched product called IPO Access, the company is allowing its customers to take part in new listings and potentially benefit from IPO discounts that have hitherto been the preserve of big money managers.

The timing of the launch of this product, just before the company's own stock market listing, is fortuitous, to say the least. It means that Robinhood itself will be one of the first test cases as it seeks to level the playing field between institutional and retail investors.

If equities are to remain the most open of the capital markets, shouldn't everyone have the same chance to take part in stock market listings? After all, as soon as the stock settles on the exchange, anybody can buy shares in the company, so why should they not have the same access during the IPO?

It is a simple and in some ways a fair argument. But there are still plenty of reasons why IPOs are not be a suitable product for retail investment, even with the latest whizzy apps.

First-day IPO "pops", as they are often called by the financial press and bankers, are just one potential effect of the heightened early volatility that tends to accompany IPO pricing. But if things go the other way, dramatic early trading falls can produce huge losses in hours.

This is because an IPO is a price discovery exercise in which banks juggle the often inflated expectations of a company going public with investors' desire to buy a stock cheap and watch it grow.

If investors feel that they have a great deal on their hands, they tend to buy more in the aftermarket and the stocks shoots up. But if they are not happy, they can quickly lose faith and run for the hills. This famously happened in March when Deliveroo, another hyped up tech stock, was listed in London and lost around 30% of its value in a single day after IPO investors lost their nerve over the valuation at which the deal had been priced. Even now, Deliveroo is still trading around 22% below the IPO price.

This comes with the territory for an institutional investor that buys IPOs all the time. The problem for retail investors is that they are merely bystanders in the price discovery battle. They do not have the ability to provide feedback like large institutional asset managers, and their small allocation, even collectively, gives them little influence once a deal has priced.

Retail buyers could be happy that they have got a great deal, but if one large hedge fund or other asset manager decides to trim its position, the effect on the stock price can be disastrous.

Sometimes a sell-off isn’t even caused by a lack of faith in the company, but merely a decision to sell excess stock after receiving a larger than expected allocation in response to an inflated order. Either way, a retail investor can only sit and watch the proceedings unfold.

Deliveroo is a good example not only of a troublesome IPO but also of retail investments turning sour. That is because the company, like Robinhood, offered its customers the chance to buy shares in the company at listing. When the deal was priced in March, 70,000 of the company’s customers watched in horror as the paper value of their investments plummeted.

They were particularly hamstrung in that case because UK IPOs trade conditionally in a grey market for institutional investors before the shares are settled, so they could not even sell their positions as the stock was tanking.

This is not to say that retail investors should be totally banned from taking part in IPOs. Many of the same arguments against investing in IPOs hold true for smaller fund managers as well.

A possible solution to some of the issues could be to make retail tranches bigger, boosting liquidity and reducing the potential impact of institutional investor sentiment on early trading.

However, issuers are unlikely to go for such an option, as they like to have big long-only asset managers in their share register. For the underwriters, meanwhile, selling chunks of shares to large accounts expedites a bookbuild.

Retail investors must be made aware that the risks of buying into a company at IPO are not the same as buying stock in the secondary market, especially because they are unlikely to make enough investments of this kind for the successes to offset the odd Deliveroo, as the institutional investors and hedge funds do.

When buying an established stock, retail investors are buying a company that often has several years of share price performance history and vast amounts of publicly available financial disclosures to peruse.

IPOs, in contrast, remain a leap of faith. Robinhood says it is making markets fairer, but it seems unfair to take retail investors along for the ride when they are sitting firmly in the backseat.

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Robinhood will livestream part of its roadshow Saturday to lure in investors

Yahoo News 20 July, 2021 - 04:54pm

Driving the news: It will livestream part of its roadshow on Saturday, with a presentation and Q&A session with CEO Vlad Tenev.

Part of that may be because it's setting aside a portion of IPO shares for customers. It only makes sense to try to target them directly.

But it's also another example of how the masses are being included in at least some of the process that's meant to drum up demand for its shares among bigwig investors.

Flashback: Coinbase traded a traditional roadshow for a Reddit Q&A — and explainer videos — ahead of its direct listing.

What’s next: Robinhood is expected to begin trading next Thursday.

The valuation is less than the $40 billion or more previously expected from the offering by the California company, which is likely to raise about $2 billion.

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Robinhood's IPO presents 'alarming' risks for investors as regulators weigh a crackdown on the company's main source of revenue, says a veteran stock analyst

Markets Insider 20 July, 2021 - 12:43pm

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Robinhood IPO: 3 Things For Investors To Know | 20 July, 2021 - 09:11am

Investors that have been eagerly anticipating the debut of popular fintech company Robinhood now have some concrete details about what could be one of the biggest IPOs of the year.

Many investors are instantly attracted to a company based solely on the fact that it is founder-led. These are businesses in which the founder is president, CEO, board member, or chairman of the company, which means they will play a significant role in driving innovation and growth over the long term.

Look at companies like Tesla (NASDAQ:TSLA) and Amazon (NASDAQ:AMZN) for classic examples of founder-led company success stories. According to filings, Robinhood’s Tenev will control about 7.9% of Robinhood's outstanding stock along with 26.2% of the voting power of the outstanding stock, which means a founder will play a critical role in the company's evolution.

Robinhood is a company that has experienced impressive top-line growth over the last year, which was largely driven by the global pandemic and record trading volumes. Thanks to plenty of extra cash from stimulus checks, unprecedented market volatility, and stay-at-home orders, the company found itself in a near-perfect situation to grow its business.

It’s also worth mentioning that Robinhood reported a net loss of $1.4 billion during the first three months of 2021, which tells us that the company is still a way off from consistent profitability. While there is the possibility that slower trading volumes impact Robinhood’s growth going forward, this disruptive company has clearly struck a chord with younger investors and is seeing top-line growth that makes it an intriguing fintech stock to monitor.

It’s a bit ironic that a company called Robinhood generates the majority of its revenue by selling its customers' order flows to market makers and high-frequency trading firms. This can lead to larger bid-ask spreads and poor order execution, which both might result in taking money out of retail traders’ pockets.

A broker should be focused on getting its clients the best available prices, and many wonder how Robinhood can do so with its business model. The SEC has already fined Robinhood millions for failing its best execution responsibilities, and it’s certainly going to be interesting to see how the company’s business model holds up going forward.

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