Robinhood IPO has a target valuation of at least US$40 billion

According to people familiar with the matter, Robinhood, an online broker associated with the surge in retail investor day trading, aims to value its initial public offering of $40 billion or more, as the company issued a fund-raising prospectus on Thursday.

Robinhood said in a regulatory document for its first review of its financial performance that last year’s revenue more than tripled from $278 million in 2019 to $959 million, and the explosive growth in the first quarter of this year continues.

It said that since the beginning of 2021, the registered users of the platform have more than doubled to 31 million. Among them, there were 18 million fund accounts at the end of the first quarter, an increase of 151% over the end of 2020. Revenue in the first three months of this year was US$522 million, an increase of 309% over the same period. a year ago.

The day before the release of the prospectus, US regulator Finra imposed the highest ever fine on the broker, allegedly fined by US$70 million, for causing “extensive and significant harm” to its clients. Finra said the failure includes technical issues on the platform during periods of high volatility.

In January, the surge in trading of “memetic stocks” such as GameStop forced the platform to suspend trading of some securities, which caused financial strain on the brokerage firm. At that time, Robinhood was racing to get US$3.5 billion from investors, and this financing resulted in a loss of US$1.4 billion for the quarter. The net income for the full year of 2020 is USD 7 million.

Robinhood’s rapid growth has been accompanied by more and more regulatory scrutiny, and its co-founder and CEO Vlad Tenev (Vlad Tenev) was asked to testify before Congress on January’s trading restrictions.

The prospectus stated that it had received a subpoena related to the January trading restrictions, and federal prosecutors executed a search warrant to obtain Tenev’s mobile phone.

The prospectus shows that the company is still under investigation by the California Attorney General’s Office and has set aside at least $15 million for fines to resolve money laundering lawsuits by the New York State Department of Financial Services.

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