Robinhood’s shares floated around the starting price of $38 per share on Thursday, after falling by 10 percent during its Nasdaq debut.
The online brokerage firm began trading under the ticker HOOOD for $38 per share, the low end of its scope, valuing the firm for around $32 billion.
Robinhood’s IPO Detailed
Robinhood, whose stock trading software grew to individual users, sold $38 of IPO shares on Wednesday night. The firm sold 52.4 million shares and raised almost $2 billion. Co-founders Vlad Tenev and Baiju Bhatt sold about 50 million dollars of stocks apiece. The business was recently valued at $11.7 billion in September in private markets.
The investment banks that spearheaded the transaction include Goldman Sachs and JPMorgan Chase. Buyers will be able to purchase a further 5.5 million shares.
In contrast to many previous IPOs, Robinhood generated $7.45 million net revenues last year on net revenues of $959 million in 2020, up from a loss of $107 million on $278 million in 2019.
But in the first quarter of 2021, brokerage lost $1.4 billion due to emergency fundraising losses during the January GameStop trading frenzy. In the first quarter of 2021, the business produced revenues of $522 million, up 309 percent of the $128 million earned in the first quarter of 2020.
Robinhood’s Unprecedented Growth
Established in 2013, the pioneer of free trading pushed the broker sector to reduce retail fees and lowered the barrier to entry to the stock market for millions of new investors.
The app saw unprecedented numbers of new, younger traders joining the stock market during the epidemic. This increase continued until 2021 with hectic trade in so-called meme stocks. In the midst of a firestorm in January, the millennial favorite stock trading app found itself among the short squeeze in GameStop, which was partly fuelled by retail investors pushed by Reddit.
As of March 2021, Robinhood, which provides stock, crypto-currency and trading choices, as well as cash management accounts, has 18 million customers up from 7.2 million in 2020, up 151%. In the second quarter, the firm expects financed accounts to reach 22.5 million.
The business expects its 18 million retail customers and its customer assets to be over 80 billion dollars in the first quarter to 22.5 million users and more than 100 billion dollars in the second quarter of 2021.
The controversy-prone business paid $70 million to FINRA, the biggest fine in the history of the authority, before declaring its intentions to be made public with the S-1. Among a laundry list of problems were failures that happened as volatility in trade soared.
In its preparation for the IPO, the business has become very professional with its “break things” attitude, which has allowed it to so rapidly develop its position and raise how brokers earn money. One of the main improvements on the platform was not to charge trade fees and enable customers to make them free of charge.
Instead, the firm pays Robinhood a significant part of its income for paying the order flow for the privilege to execute its trades at or better rates at an exchange pricing.