Robinhood valued at $32bn as it prices shares ahead of IPO
Popular trading platform Robinhood has been valued at $32bn (£23bn) after pricing its shares at the lower end of the guidance range ahead of its stock market debut.
Robinhood priced its shares at $38 each — the bottom end of its $38 to $42 range — as it gears up for an eagerly-anticipated initial public offering today.
It sold 53.4m shares — below the 55m it had been targeting — and raised around $2bn.
A significant chunk of the shares were sold by founders Vlad Tenev and Baiju Bhatt, whose stakes will be worth around $2bn and $3bn respectively at the IPO price.
Robinhood, which was founded 2013, has surged in popularity in recent months amid a frenzy of trading in so-called meme stocks and found itself at the centre of a meme stock craze that roiled global markets earlier this year.
It now has an estimated 22.5m funded accounts, according to its latest prospectus.
Market volatility during the pandemic, combined with a surge in interest from armchair traders, helped fuel a four-fold jump in its revenue between January and March.
However, it also came under fire after it was forced to curb trading of stocks such as GameStop and was forced to raise $3.4bn in emergency funds to help shore up its finances.
In an unusual move, Robinhood has reserved between 25 and 30 per cent of its IPO shares for retail investors who are users of its app.
The platform has warned that the participation of retail investors could spark volatile trading once its shares start trading.
“There is likely to be huge interest in Robinhood’s IPO, given the swirling speculation about the company on social media forums and the media coverage the company received as it became a central figure in the GameStop craze earlier in the year,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“The company was set up to help further democratise investing in the US and draw more ordinary traders into the Wall Street world. But the company has come under the regulatory spotlight and that could have a big impact on the company’s future potential as an investment.”