Robinhood Markets Inc. requested an initial public offering and revealed that it was profitable last year only to increase its losses in the first quarter, in one of the most prominent upcoming lists of the year.
The company, which offers its trading platform to novice investors, cataloged the size of the offer as $ 100 million, a position marker that will change when it sets the conditions for the sale of shares. Thursday’s registration statement comes after Robinhood’s announcement in March that it had filed confidentially to be made public.
Robinhood said it generated net income of $ 7.45 million in net income of $ 959 million in 2020, compared to a loss of $ 107 million at $ 278 million the previous year, according to the filing.
The company’s revenue increased during the first quarter, topping $ 522 million compared to $ 128 million in the same period last year, according to the filing. However, its losses increased astronomically, from $ 53 million in the three months ended March 31, 2019 to $ 1.45 billion in the last quarter. This loss was primarily attributed to a fair value adjustment to convertible notes and collateral liabilities, the company said in the filing.
The cryptocurrency trade in Robinhood increased in the first quarter, with 17% of its total revenue related to related transactions.
The potential valuation of Robinhood will be clearer when the number of shares it plans to sell and the proposed price range for them are revealed. Bloomberg Intelligence analyst David Ritter has said the company could be worth up to $ 40 billion.
Robinhood’s appeal came during the coronavirus pandemic when young people at home engaged in online commerce to pass the time and make money. Its monthly active users have doubled more than last year, with 17.7 million in the first quarter, compared to 8.6 million in the same period last year.
This increased popularity has led to control by politicians and regulators, who focus on the so-called gamification of trade and the role of the company at the center of the meme frenzy.
Robinhood also had to raise billions of dollars from its sponsors, in the midst of frantic frenzy in late January for “meme stocks,” such as GameStop Corp., which became popular on commercial forums and apps. Reddit.
The financial industry regulatory authority on Wednesday imposed a $ 70 million fine on Robinhood, a record for the watchdog. Finra alleged that Robinhood deceived its customers about margin trading and stopped monitoring technology and approvals for options traders. Robinhood neither admitted nor denied the claims.
Robinhood states in his presentation that his mission is to “democratize finance for all.”
Robinhood was founded by two Stanford alumni Baiju Bhatt and Vlad Tenev who met at the university. Both are children of immigrants and grew up in rural areas of the US
“The next generation of investors is younger and more diverse than ever, and finances are as culturally relevant as music and the arts,” Tenev and Bhatt said in a letter to investors.
However, the company warns that “unfavorable advertising in the past has negatively affected and could negatively affect our reputation in the future.”
The Menlo Park-based company, California, said at the presentation it will reserve between 20% and 35% of its Class A shares for its customers.
The company will have two other share classes, with Class B shares with 10 votes each and Class C shares with no voting rights. According to the filing, all Class B shares will be held by executives and executives of the company after the IPO.
Robinhood’s major shareholders are venture capital firms DST Global, Index Ventures, New Enterprise Associates and Ribbit Capital. Each group owns more than 5% of the Robinhood shares they bring to the offer.
The listing gives new impetus to the 202 IPO market. To date, companies, including blank check companies, have raised more than $ 200 billion on U.S. stock markets, the busiest year. registered, according to data collected by Bloomberg. Consumer-facing companies such as Warby Parker Inc., Sweetgreen Inc. are expected. and Allbirds Inc. make their public debuts later this year, Bloomberg News reported.
Robinhood said in June that new advisors would join its board, including Jon Rubinstein, who helped create the iPod for Apple Inc. and is director of Amazon.com Inc., Robert Zoellick, former president of the World Bank, and Paula, a partner at PricewaterhouseCoopers. Loops.
The company’s lines of credit include a $ 600 million revolver from banks such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, according to data collected by Bloomberg.
Robinhood’s offering is led by Goldman Sachs and JPMorgan. Its shares are expected to be listed on the Nasdaq Stock Exchange under the symbol HOOD.