The fast-growing, contentious Robinhood is about to make its market debut.
Robinhood’s purpose is to “democratize finance for all,” and that mission extends to the company’s plan to go public on Thursday.
The online investment platform, which is anticipated to begin trading on the Nasdaq under the ticker code “HOOD,” has put aside up to 35 percent of its IPO shares for sale to its customers.
Individual investors are often barred from IPOs, so Robinhood’s action is the latest departure from custom in the company’s meteoric development, which has only accelerated amid the coronavirus outbreak.
The business said on Wednesday night that it had raised $1.9 billion in an IPO priced at $38 per share, which was the low end of the range in its prospectus.
At the end of March, the firm had $81 billion in assets under its custody, up from $14.2 billion at the end of 2019. Its commission-free stock trading concept has been imitated by other competitors.
Its IPO is one of the most talked-about in recent memory, generating excitement about a $32 billion valuation but also skepticism about its business model and prospects for further growth.
Vladimir Tenev and Baiju Bhatt met as freshmen at Stanford University and started Robinhood in 2013.
According to a prospectus, the company has positioned itself as a niche for underinvested “ordinary people,” citing the need to serve “the next generation of investors,” who are younger and more diverse than previous cohorts. Robinhood’s average customer is 31 years old.
The so-called “Reddit Rebellion,” in which retail investors banded together on the social media platform this year to back beaten-down firms like GameStop and BlackBerry, was aided by Robinhood’s rising base of individual investors.
During the epidemic, the company’s user base grew dramatically, with the number of accounts more than doubling to 18 million by the end of March.
Attracting new consumers, giving additional financial services to users as they accumulate wealth, and expanding worldwide are all part of Robinhood’s growth strategy.
The growth of Robinhood, however, has not been without controversy.
FINRA charged the company with harming thousands of consumers through “false and misleading” communications and other failures, and the company agreed to pay a $70 million fine soon before filing papers to go public.
Gary Gensler, the chairman of the United States Securities and Exchange Commission (SEC), has targeted the company’s business strategy.
Despite the fact that Robinhood does not charge commissions to its users. Brief News from Washington Newsday.