Robinhood, whose stock trading app has become increasingly popular with retail investors, sold stocks for $ 38 apiece when it went public and valued the company at approximately $ 32 billion.
Prior to Thursday’s Nasdaq debut, Robinhood stocks were trading at the lower end of the $ 38-42 range. The company, trading under the ticker symbol HOOD, sold 52.4 million shares, raising nearly $ 2 billion. Co-founders Vlad Tenev and Baiju Bhatt sold shares worth approximately $ 50 million each.
Robinhood has become a central gateway to the markets for young and first-time investors. The app, which offers stock, cryptocurrency, and options trading, as well as cash management accounts, saw record levels of trading during the pandemic and amid the meme stock craze in early 2021.
Robinhood estimates it had 22.5 million funded accounts (tied to a bank account) in the second quarter. That’s 18 million in the first quarter of 2021, up 151% year over year. The company was last valued at $ 11.7 billion in the private markets in September.
Goldman Sachs and JPMorgan Chase are the lead investment banks in the transaction. The syndicate banks have the option of buying another 5.5 million shares.
In its updated prospectus, Robinhood estimates second-quarter revenue at $ 546 million to $ 574 million, compared to $ 244 million in the second quarter of 2020. Revenue increased 309% to $ 522 million in the first quarter. $ 128 million last year.
However, Robinhood expects a net loss of $ 487 million to $ 537 million in the second quarter after posting a profit in the same quarter last year.
Robinhood raised $ 331 million for order flow in the first quarter – the money brokerage firms receive for referring client business to market makers. The payment for the order flow was reviewed by the regulatory authorities in 2021.
Options trading makes up about 38% of sales, while stocks and crypto make up 25% and 17% of sales, respectively. However, Robinhood cautioned that the brokerage could see a slowdown in its trading income and account growth as the retail boom cools.
Robinhood’s competitors include Fidelity, Charles Schwab, Interactive Brokers, and newer services like Webull and SoFi. Charles Schwab has a market capitalization of $ 130 billion and Interactive Brokers has a market valuation of $ 26 billion.
DST Global, Index Ventures, NEA, and Ribbit Capital are some of Robinhood’s largest investors.
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