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An IPO would allow Robinhood to raise new capital and obtain financing.
AFP via Getty Images
Robinhood Markets, the trading app that is under scrutiny for
GameStop
trading, is moving ahead with plans to go public, said four bankers and venture capitalists.
The startup’s IPO plans are on track and an offer is expected in the coming months, probably in the second quarter, three people said.
“THE [Robinhood] The IPO is in full swing, ”said one of the bankers.
Goldman Sachs
(ticker: GS) is advising on the offer, said one of the people.
An IPO would allow Robinhood to raise new capital while allowing the company, once opened, access to finance, people said. Robinhood was pressured to raise $ 3.4 billion last week after a shopping frenzy forced the trading platform to increase the money he deposits at the clearing houses that process his trades.
Robinhood and Goldman executives declined to comment.
Founded in 2013, Robinhood offers commission-free trading in stocks, ETFs, options and cryptocurrencies, as well as margin, PitchBook said. The company sends customer orders to market makers such as Citadel Securities, Virtu Americas and G1X execution services. It had 1,281 employees in 2020.
On Monday, Robinhood said he added another $ 2.4 billion in a round led by
Ribbit Capital.
That funding came after the startup raised $ 1 billion from current investors last week.
Menlo Park, Calif., Came under pressure after Robinhood limited GameStop trading (ticker: GME) and other stocks. The change caused outrage among its clients, investors and on Wall Street. Even Congressman Alexandria Ocasio-Cortez (DN.Y.), and other lawmakers, wrote about
Twitter
that Congress should examine Robinhood’s actions more deeply.
Robinhood tried to explain his actions, claiming that the clearinghouse’s requirements led the company to limit trading in certain shares, according to a January 29 blog post. The company said that the deposit requirements mandated by the clearinghouse increased to 10 times the normal number and Robinhood “had to take steps to limit the purchase of these volatile bonds to ensure that we could comfortably meet our requirements”.
The fury over Robinhood’s tactics has not diminished his popularity. The application was downloaded more than a million times in the past week. This prompted a hedge fund executive to say that Robinhood’s IPO is likely to still be a winner. “If they are increasing users and have a plan to resolve PFOF problems with Citadel, I think they can still go public with some Twitter haters out there,” said the executive.
PFOF refers to payment for order flows. Trading on Robinhood is sold to market makers or large companies like Citadel.
An IPO would provide an outlet for many Robinhood investors. They include D1 Capital Partners, Sequoia Capital, NEA, 9 Yards Capital and Unusual Ventures. Some of Robinhood’s first sponsors, such as Index Ventures, Draper Associates and Andreessen Horowitz, participated in the company’s $ 3 million seed round in 2013.
Index Ventures and Draper declined to comment. Ribbit, Sequoia, NEA, 9 Yards and Andreessen did not return messages for comment.
Write to Luisa Beltran at [email protected]