On Thursday, Robinhood launched its expected IPO as it revealed the rapid growth of its trading app users in a filing, and also raised a kind of flag of investigation by prosecutors and regulators.
The company is aiming for a িয়ন 40 billion (approximately Rs 2,97,900 crore) IPO valuation under this year’s investigation following the business frenzy of so-called meme stocks like GameStop, Reuters reported.
Robinhood’s IPO notes for the first time in detail how Trading Mania, which has cracked down on amateur investors, has quadrupled its revenue from January to March, and how its rapid expansion has been spent.
It has reported a net loss of ৪ 1.4 billion (approximately Rs 10,460 crore) after taking ৩ 6.3 billion (approximately Rs 266,150 crore) through convertible bonds to oversee business orders in several phases of the realty. Short by Hedge Fund and championed by individual investors in online chatrooms, including Reddit’s Wall Streetbates.
The management of its memo stock frenzy has been forgotten with glitches, and subsequent trade bans have angered many of its users and U.S. lawmakers.
Legal authorities and regulators, who were already looking at Robinhood’s aggressive marketing investors and how it would profit from business orders, doubled their investigations.
An investigation by the U.S. Attorney’s Office in California turned even Robinhood’s co-founder and CEO Vlad Tenev’s cellphone into an IPO filing show.
A spokesman for the U.S. Attorney’s Office in Northern California declined to comment.
Earlier this week, California-based firm Menlo Park agreed to pay a 70 million (approximately Rs 520 crore) fine as part of a deal with U.S. financial regulators who complained it failed to monitor customers and enforce risk control.
According to the information filed, Robinhood and CEO Tenov have been requested and requested information from a number of government agencies, including the U.S. Department of Justice and the U.S. Securities and Exchange Commission.
The family was also sued this year for referring to the app as “misleading communication” and the company also sued a 20-year-old fun businessman, leaving the boy in a state of panic because he mistakenly believed the huge market was damaged.
Most of Robinhood’s income is derived from “paying for the flow of orders”. Under this practice, brokers charge a fee from market makers to trade routing to them.
Critics have argued that this creates a conflict of interest, urging brokers to send orders in order to make the most money, which may not be the best deal for customers. Regulators are checking Robinhood on it.
In the first quarter of this year, 59 percent of Robinhood’s revenue came from four market makers. Last year, its revenue rose to 9 959 million (about Rs 7,170 crore), the agency said.
Robinhood turned a profit in 2020, reporting a net income of $ 7 million (approximately Rs 50 crore), as against a loss of 7 107 million in 2019.
The company held about 12 12 billion (about Rs 89,690 crore) in cryptocurrency assets under custody on March 31, 2021, up 23 times from a year earlier. More than 9.5 million customers traded cryptocurrencies worth about র 6 billion (approximately Rs 6,57,800 crore) on Robinhood’s platform at the same time.
Visit the app for young investors
Founded in 2013 by Stanford University roommates Tenev and Baiju Bhatt, Robinhood’s trading app has made it easier for the public to trade securities and has electrified a generation of retailers.
The platform’s easy-to-use interface gives access to young investors stranded at home due to epidemics, and its popularity has grown over the past 18 months.
Instantly introducing the breakout financial technology of his generation, Robinhood has captured the imagination of the largest investors in Silicon Valley, who have invested billions of dollars in the company. It challenges the old rules around investing by rejecting the role of financial advisor.
“Some pundits ridicule individual stock ownership and say people should only invest in passive-managed funds through an advisor. We reject this and we believe it is important to acquire ownership of any shares directly in your preferred companies, without any intermediaries.” Tenev and Bhatt said in the IPO filing.
Underwriters will reserve between 20 percent and 35 percent of Class A for sale to customers through the IPO access feature, a platform that allows retail investors to snatch shares in IPOs in May, Robinhood said.
Robinhood has raised about 5 5.5 billion (about Rs 41,125 crore) from investors since its inception, including Ribit Capital, ICNIQ, Anderson Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates.
According to people familiar with the matter, its valuation nearly tripled last year alone, with a financial firm valued at about 30 30 billion (about Rs 2,24,325 crore) in February, according to people familiar with the matter.
Online brokerages plan to list on the Nasdaq according to the “HOD” symbol.
Goldman Sachs and JP Morgan are the top underwriters on the offer.
Thomson Reuters 2021