Robinhood plans for valuation of $35 billion in mega IPO

Karthik Subramanian

Robinhod Markets, the company that runs the stock trading app that has been making waves among the younger generation, has revealed that it is targeting to be valued at $35 billion in its initial public offering.

About 55 million shares are being offered in the IPO and with each share expected to be valued between $38 to $42, it is looking to collect $2.3 billion from the IPO. The platform offers unlimited commission-free trading on stocks, ETFs, and cryptocurrencies and though it has had many competitors over the years, the user experience and the smooth flow of the UI that it provides for users has been unparalleled so far which has made it very high demand by the younger users.

Nearly 2.63 million of these shares that are being offered would come from the founders and the CFO with the founders continuing to hold the majority of the voting power even after the IPO. The filing also said that the platform had 18 million funded accounts as of March 31 of this year.

The company had faced a lot of criticism at the beginning of the year over its handling of the trading surrounding meme stocks like GameStop. Though this issue helped it to multiply its trading volumes and revenues manifold as lots of traders jumped in to make quick money, it was also forced to stop and regulate the trading to avoid getting into trouble over capital demands.

At that time, it had also raised over $3 billion at a valuation of $30 billion to meet the liquidity demands. This also has been a difficult year for IPOs in general especially those IPOs belonging to very large companies. The IPOs that were launched this year haven’t performed very well and it will indeed be a test for the Robinhood IPO and the market as a whole when the trading is launched for it.

The company has also committed to offering 20% to 35% of the shares to the users of RobinHood itself in a way, that it believes, would be democratizing the IPO ecosystem which has long been the realm of large investors who usually get a huge slice of the pie. This is likely to drive up the retail demand for the stock which should help to support the price at least in the short term.

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