Robinhood IPO: SEC Expects Firm to Reach $35 Billion Valuation

As disclosed on Monday, the Securities and Exchange Commission (SEC) expects Robinhood IPO to reach a $35 billion valuation. Q2 2021 hedge fund letter...
Robinhood IPO: SEC Expects Firm to Reach $35 Billion Valuation
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This story originally appeared on ValueWalk

As disclosed on Monday, the Securities and Exchange Commission (SEC) expects Robinhood IPO to reach a $35 billion valuation.

Q2 2021 hedge fund letters, conferences and more

Robinhood IPO, Highly Anticipated

The controversial trading app, which has opened up market investment to younger people, will aim at selling shares at $38-$42 apiece and will seek to raise about $2.3 billion with the sale of 55 million stocks.

As reported by CNN, the targeted valuation, “would make Robinhood more valuable than about two-thirds of the S&P 500, putting it somewhere near Yum Brands, Corning, and HP.”

Robinhood presented its draft plan to list on Wall Street last March and expects to start doing so next week ––it is one of the most anticipated IPOs this year.

In its submission to the SEC, the California-based company also released an update of its accounts, with revenues of $522 million in Q1 2021, and between $546 to $ 574 million in Q2 ––more than double from the previous year.

Controversies

Robinhood, founded in 2013, has had a meteoric rise thanks to its ease of use and the convenience inherent to mobile applications while arguing that it doesn’t impose direct commissions on the user.

However, the company has been under blazing fire as the Financial Regulation Authority (FINRA) in the U.S. fined it a mammoth $70 million for sending users false or incorrect information about their account statements.

According to investor Charlie Munger, the “commission-free, now and forever” claim by Robinhood did not fall through, as the firm was “telling people they aren’t paying commissions when the commissions are simply disguised in the trading.”

In Control

Recently, the firm reached a settlement with the family of Alexander Kearns, a 20-year-old user who committed suicide last year “after seeing a negative balance of $730,000 in his Robinhood account and mistakenly believed he owed that amount,” CNN reports.

Robinhood’s anticipated IPO will not diminish the influence of CEO and co-founder Vlad Tenev and co-founder Baiju Bhatt over the company. Of the 52.4 million shares the firm is set to sell, both will sell another 2.6 million shares in the deal.

“After the IPO closes, all Class B shares will be owned by Tenev and Bhatt. Tenev will control about 7.9% of Robinhood’s outstanding stock as well as 26.2% of the voting power of the outstanding stock, according to filings.”

Earlier in July, a new analysis from S&P Global Market Intelligence had estimated that the company was bound to break the $20 billion valuation mark up to $30 billion.

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