- Retail trading app files for IPO…
- Robinhood details changes made after record-breaking FINRA fine…
- More trouble may be on the horizon…
Stock trading platform Robinhood is prepping for its long-awaited IPO.
Robinhood Markets, Inc. filed a Form S-1 with the SEC today with plans to list on the Nasdaq and raise $100 million in the market debut.
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Robinhood Markets, Inc. plans to trade on the Nasdaq under the ticker symbol HOOD.
The number and pricing of shares that will be offered in the IPO have not yet been made public.
But Robinhood said it does plan to set aside 20% to 35% of those shares for retail investors.
The company says, “Goldman Sachs & Co. LLC and J.P. Morgan are acting as joint lead book-running managers for the proposed offering. Barclays, Citigroup, and Wells Fargo Securities are acting as active book-running managers for the proposed offering.”
The S-1 filing shows Robinhood lost $1.4 billion in Q1 2021 as revenue surged 309% year-over-year to $522 million.
The company also says its funded accounts rose to 18 million in March, up 151% from March of 2020.
Crypto transactions also surged over the past year with revenue rising to 12% of Robinhood’s total revenue in Q1 2021 vs just 4% of total revenue in Q4 2020.
Dogecoin was a big contributor to that increase as the meme coin gained popularity in early 2021.
Robinhood says, “34 percent of our cryptocurrency transaction-based revenue was attributable to transactions in Dogecoin.”
Assets under management rose to about $80 billion from $19.2 billion and monthly active users jumped to 17.7 million.
The filing comes one day after FINRA announced Robinhood had agreed to pay a massive $70 billion fine, the largest ever imposed by the regulator.
Robinhood Takes Responsibility
The online trading platform took to its blog to address changes it was making following the fine on Wednesday.
Robinhood said, “We’ve made investments in expanding customer support – and are now offering phone support for several areas, including options and equities trading, account security, and other use cases. We’ve enhanced our options offering, education about options, and how information is displayed in the app.”
The company says they now have 2,700 customer support staff which is triple the number they had in March 2020.
They’ve also expanded phone support after previously only offering email support.
“Through the Robinhood app, you can request phone support Monday through Friday from 8 am to 8 pm EST and speak with a registered representative across several issue types including account security, banking issues, equities trading, restrictions as well as Options. We offer extended hours for options support that span 24 hours per day from Monday 5 am to Saturday 5 am EST.”
Robinhood is also stepping up its educational options for traders.
They say those resources allow users to “learn about the basics of investing, why people invest, and what the stock market is and how it works.”
The company also addressed technological changes to avoid widespread outages like the one seen in March 2020.
“We’ve taken steps to address the root causes of the March 2020 outages, reduce the risk of future outages, and increase the resilience of relevant systems, including by increasing system redundancy, better distributing load on Robinhood’s systems, and deploying a risk-based testing system.”
It has also added new “customer communications and data displays”, “improved supervision of options”, and “enhanced legal, compliance, risk, and anti-fraud functions.”
Robinhood ended that post saying, “Our customers are at the forefront of every decision we make and we’re committed to making continuous improvements so that investing can be accessible to all.”
Not Out of the Water
Even as Robinhood chooses to move forward with its IPO, the S-1 filing with the SEC shows the possibility of more trouble ahead.
In that document, the company reveals the U.S. Attorney’s Office for the Northern District of California has executed a search warrant for co-founder and CEO Vladimir Tenev’s phone and is also seeking information about a recent SEC Enforcement Division inquiry into the app’s “For You” feature.
It also says some 1,600 customers “may pursue arbitration of individual claims against us arising out of the March 2020 Outages, in addition to other alleged system outages.”
There’s also increased attention from Congress, with Senator Elizabeth Warren calling on regulators to hold the company accountable in a tweet on Wednesday.
2019: Robinhood cheats customers, pays a fine— Elizabeth Warren (@SenWarren) June 30, 2021
2020: Robinhood cheats customers, pays a fine
2021: Robinhood cheats customers, pays a fine
Robinhood won't clean up its act with slap-on-the-wrist settlements. Our regulators need to show some backbone to hold Robinhood accountable. https://t.co/4APpNv6DLt
But it appears Robinhood may have just been waiting to settle the FINRA investigation before moving forward with its IPO plan.
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