On Thursday Robinhood Markets Inc. filed for an Initial Public Offering (IPO), which is being described as one of the most anticipated IPOs in a long time. The California-based financial services company revealed that it had witnessed massive growth – it now has 18 million retail clients and customer assets worth $80 billion.
According to its filing with the Securities and Exchange Commission, the company had a net income of $7.45 million and net revenue of $959 million in 2020. The previous year, the company recorded a loss of $107 million and net revenue of $278 million.
Known for offering commission-free trades of stocks and exchange-traded funds via a mobile app introduced in March 2015, Robinhood was founded in 2013 by Vlad Tenev and Baiju Bhatt. It pioneered free stock trading, forcing the entire industry to drop commissions in 2019. Some of its services include offering equity, cryptocurrency, and options trading, as well as cash management accounts. While most trades can be done for free, the app makes money from customer order flow and a premium paid service.
The company plans on trading under the ticker symbol “HOOD”, and aims to raise $100 million. The company mentioned in its prospectus that it has increased the number of funded accounts under its belt to 18 million as of March 2021, from 7.2 million in 2020. The increase is more than twice the amount of accounts from last year and stood at 151 percent. From 19.2 billion in March of 2020, the company’s customer assets have grown to $80 billion, about a 316.6 percent increase from the previous year. The company also revealed that monthly active users ran into a total of 17.7 million, and plans to allocate between 20 to 35 percent of its IPO shares to its retail customers.
Some of Robinhood’s biggest venture capital investors include Sequoia, D1 Partners, Google’s venture capital arm – GV, and Kleiner Perkins. Goldman Sachs, Citigroup, and JPMorgan are the lead underwriters on the deal.
Robinhood has recorded both huge gains and big losses. According to its regulatory filing with the SEC, the company collected a record $331 million in payment for order flow first quarter of 2021. The company has also seen its customer base and assets grow quite astronomically too. On the other hand, the company has had quite some discouraging moments, like its recent FINRA $70 million penalty and the multiple lawsuits that it has faced over time.
Robinhood stands for “democratizing” the methods and processes involved in making investments. Robinhood’s IPO is one of the most anticipated IPOs and the company remains seen as one of the main paths for young investors to gain access into the market.