Robinhood IPO: Filing to Go Public After 2020 Profitability
Robinhood Files for Initial Public Offering
This afternoon, Robinhood, the widely-used investment application, submitted its initial filing to become a publicly traded company. The company plans to be listed on the NASDAQ stock exchange using the ticker symbol “HOOD.”
Anticipated Public Offering
The release of the S-1 filing by Robinhood today was largely expected. The company had confidentially filed for an IPO back in March, prompting anticipation within the startup community for the official document to be released. The preliminary offering document indicates a target raise of $100 million, a figure subject to change as the debut date approaches.
Rapid Revenue Growth
The move towards a public listing follows a period of substantial expansion for the company. Robinhood experienced a significant increase in revenue, rising from $277.5 million in 2019 to $985.8 million in 2020.
The company’s performance in the first quarter of 2021 was particularly noteworthy. Revenue generated during the initial three months reached $522.2 million, representing approximately a fourfold increase compared to the $127.6 million earned in the first quarter of 2020. Previous filings concerning its payment-for-order-flow (PFOF) business led TechCrunch to predict a strong first quarter.
Profitability and Expenses
Robinhood achieved profitability in 2020, reporting a net income of approximately $7.4 million for the year. However, the most recent financial period included a substantial $1.49 billion expense attributed to “changes in fair value of convertible notes and warrant liability.” This resulted in a considerable net loss of $1.44 billion for the first quarter, contrasting with a net loss of $107 million in 2019.
Operating expenses for the three months ending March 31 totaled $463.8 million, encompassing “brokerage and transaction” costs. Excluding the impact of fair-value adjustments, the company demonstrated solid profitability at the start of the year.
Scaling to a Large User Base
Robinhood’s achievement of a greater than $2 billion annual run rate by the end of the first quarter of 2021 is significant. The firm has rapidly grown to a considerable scale, fueled by increasing consumer engagement in both stock and cryptocurrency investments.
Over the past year, Robinhood has been a focal point for regulatory scrutiny, fines, widespread adoption, and cultural impact. The company also secured billions in funding following operational challenges related to trading in specific stocks favored by retail investors.
Major Shareholders
DST Global, Index Ventures, New Enterprise Associates, and Ribbit capital are identified as shareholders holding more than 5% of the company each. Complete details, including share counts for these groups, are still pending inclusion in the S-1 filing. DST currently holds 58,102,765 Class A shares.
Share Class Structure
Robinhood utilizes three classes of shares: Class A shares carry one vote each, Class B shares have ten votes, and Class C shares possess no voting rights.
TechCrunch is currently analyzing the S-1 filing and will provide further insights in a subsequent article. Update: Available here!
