Ahead of its Nasdaq debut on July 29, Robinhood priced shares at the low end of the $38 as well as $42 range. Robinhood sold shares in its initial public offering (IPO) at $38 a piece, valuing the company at about $32 billion. Robinhood will trade under the ticker symbol HOOD. It sold millions of shares, more precisely 52.4 million, and raised close to $2 billion. Vlad Tenev and Baiju Bhatt founded the company in 2013. Co-founders of the company each sold about $50 million worth of stock.
The company has become a central gateway to the markets for young as well as first-time investors. Its stock trading app experienced record trading levels during the pandemic and amid the meme stock craze of early 2021.
The financial services company estimates it has 22.5 million funded accounts (those tied to a bank account) as of the second quarter of 2021. Notably, that’s up from 18 million in the first quarter of the year, which was an increase of 151% from a year earlier. The financial services company from Menlo Park was last valued in the private markets at $11.7 billion in September.
Two main banks Goldman Sachs and JPMorgan Chase are the lead investment banks on the deal. Underwriters will be able to purchase an additional 5.5 million shares.
In its updated prospectus, the company estimated the second quarter revenue of $546 million to $574 million, up from $244 million during the same period of time in 2020. The company’s revenue rose 309% in the first quarter to $522 million from $128 million a year earlier.
But the company expects to swing a net loss of $487 million to $537 million in the second quarter. As a reminder, in the first quarter of 2020, the company generated profit. It collected $331 million in payment for order flow in the first quarter. Payment for order flow received scrutiny from authorities in 2021.
Options trading accounts for about 38% of Robinhood’s revenue while equities and crypto are 25% and 17% of revenues, respectively. Nonetheless, it warned that the brokerage could see a slowdown in its trading revenue and account growth as the retail trading boom cools.
Robinhood has to compete with serious rivals like Fidelity, Charles Schwab, Interactive Brokers, and others. One of its rivals Charles Schwab has a market capitalization of $130 billion.
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