On July 1st, Robinhood Markets Inc filed for an IPO, with the plan to allocate as much as 35% of its shares for its customers through its own platform. This could go down to 20% but either way, it’s a great deal more than the average IPO. According to the Financial Times, they’re hoping for an evaluation of $40 billion as a minimum.
The decision has not come without controversy nor critics, considering Robinhood has been subject to several regulatory regulations. In the same week the announcement was made, Wall Street reportedly levied a $70 million dollar penalty against Robinhood. That said, there can be little doubt that this is one of the year’s most hotly anticipated and significant listings: one which will make waves across the financial world.
This is partly because of the success of the company itself. According to the regulatory filing, Robinhood claims that their revenues tripled to $959 million from $278 million in 2019. In addition, they have doubled their user base since the beginning of 2021, with around 31 million people having accounts: 18 million of which are said to be funded. In real terms, the amount of people who are putting money into Robinhood is up 151 per cent from the end of last year.
There can be little doubt of the influence of cryptocurrencies in this surge of accounts, with an estimated $11.6 billion crypto assets under custody. This accounts for 17 per cent of revenues in the first quarter: an increase from 4 per cent from the previous quarter.
Of course, some of their success relates to the surge of trading on stocks, such as GameStop, which forced a suspension of such securities back at the end of January. It certainly put Robinhood in the centre stage of the public eye, regardless of the political and social commentary surrounding what will surely remain one of the biggest financial stories of the year.
IPO Access Launched in Beta Stages
While we don’t expect this IPO filing to make mainstream headlines quite in the same way, it’s clear that Robinhood looks to shake up the industry again. Alongside their own filing and news of share allocation, there’s also the launch of IPO Access. This service takes IPO’s and makes them more readily available for retail traders as opposed to being reserved for traditional investors.
Put simply, if you’re registered with Robinhood, you can buy shares of companies at launch prices, without any set minimum amounts. However, it’s currently at beta stages with only randomly selected customers being offered the service. We can only speculate on how they intend to roll it out further in the future.
Regardless, it’s clear Robinhood are pushing forward with their plans to not only expand their own platform, but also to change the financial landscape for many investors. Their future may be tough to predict but the course Robinhood have set themselves on shows no signs of deviating.
