The controversial Robinhood trading platform has filed an Initial Public Offering (IPO) paperwork with the US Securities and Exchange Commission (SEC). Robinhood confidentially submitted a registration statement draft on Form S-1, revealing its plan to go public later this year.
The Silicon Valley startup provides a mobile trading app that is particularly popular with millennials and younger traders. It makes the stock market easily accessible, comprehensible, and more understandable to young people.
Before the GameStop Frenzy, Robinhood was considerably successful in reducing young people’s underrepresentation in the stock market. Millennials use the no-fee app to trade stocks and the emerging digital assets class, which includes cryptocurrencies.
The filing didn’t, however, specify the exact date of the offering or whether it will be a direct listing or an IPO. There is also no indication of the number of shares that will be on sale or at what prices.
“The IPO should take place after the SEC completes the review process subject to market and other conditions.”
Robinhood’s Valuation at $40 Billion in Secondary Markets
In September 2020, Robinhood raised $600 million in its extended Series G funding round. Some of its notable investors included Andreessen Horowitz, 9Yards Capital, Ribbit Capital, Sequoia, and D1 Partners.
The first round had raised $460 million, whose extension occurred after D1 Capital offered to invest $200 million more. The firm allegedly retained Goldman Sachs services which it hired to lead its IPO in 2020. Additionally, its last private valuation was around $11 billion, just before the first offering.
Robinhood has a current value of $40 billion as a fintech company in the secondary market. The figure was supposedly double the initial $20 billion valuations estimated by people familiar with the discussions.
After the GameStop frenzy, which left Robinhood under the SEC’s radar, many people expected its valuation to fall. The firm has been accused of intervening in favor of wall street hedge funds during the January trading war fiasco.
However, even with the threat of over 50 lawsuits looming over the company, its valuation has remained intact. The firm raised $1 billion in emergency funding and another $500 million via credit lines access.
Robinhood Pays $26 Million in FINRA and SEC Charges
FINRA is investigating the Robinhood alongside the SEC for various trading violations. These include restricting trading for GameStock stocks, frequent service outages, and poor communication with customers. The audit-oriented investigation at an advanced stage could cost Robinhood over $26 million in settlement fines.