Robinhood has just given its biggest indication that it plans to go through with an initial public offering this year, confidentially filing its paperwork for an IPO.
The Silicon Valley startup, mostly used by millennials to trade stocks and cryptocurrency, said today that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission.
However, Robinhood did not reveal when it expects to go through with the offering, how many shares it plans to sell or what price it expects to offer them at. The company also did not specify whether it would go public through a direct listing or an initial public offering (IPO).
Before that, the form goes into effect only after the SEC completes its review process. And, if the regulator refuses to sign off on such an arrangement, in which new shares are created, underwritten and sold to the public, Robinhood could pursue a direct listing in which no new shares are created and only existing shares are sold with no underwriters involved.
The Company’s Statement Further Reads:
“Robinhood Markets, Inc. has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the ‘SEC’) relating to the proposed initial public offering of its common stock. The number of shares to be offered and the price range for the proposed offering have not yet been determined. The initial public offering is expected to take place after the SEC completes its review process, subject to market and other conditions.”
Robinhood Valued at $40 Billion in Secondary Markets
Robinhood has reportedly hired Goldman Sachs to lead its initial public offering back in December 2020. The popular stock-trading was last privately valued at $11.7 billion when it announced a $200 million Series G funding in September.
However, the latest bids in the secondary market value the fintech company at more than $40 billion. That was double the proposed IPO initial valuation at $20 billion, according to people cited by media as familiar with the discussions.
The fintech’s growing valuation was not affected even after Robinhood upset many of its users when it temporarily suspended trading of the so-called meme stock.
However, this situation forced the company to raise $1 billion in emergency funds from investors, on top of $500 million the broker accessed through credit lines, to meet clearinghouse deposit requirements.
Moreover, Robinhood faces regulatory investigations on multiple fronts, including alleged failures to protect inexperienced investors while aggressively promoting its products to them.
Additionally, the no-fee app crashed many times in 2021, but the trading outages did not seem to have scared retail traders away from the commission-free broker.
All these incidents apparently did little to damage Robinhood’s popularity.