(Bloomberg) – Robinhood Markets Inc., the trading platform behind GameStop Corp.’s stock boom and bust, plans to privately register an initial public offering as early as March, according to people familiar with the matter.
The company spoke last week with subscribers about filing a lawsuit within weeks, said the people, who asked not to be named because the matter is not public. No final decision has been made and the timing may change, people said.
Robinhood, who was valued at $ 11.7 billion in a financing round last year, raised funding this year that will be converted into equity in an IPO. The first tranche will be converted to a $ 30 billion valuation or a 30% IPO discount, whichever is less, with the second tranche being less than the 30% IPO discount or a $ 33 billion valuation, the company said. Bloomberg.
A representative from Robinhood, based in Menlo Park, California, declined to comment.
Robinhood’s popularity exploded during the pandemic, when young people living at home turned to his commercial app to earn money and spend time. The company, which has been targeting an IPO in 2021 since at least last year, faced a cash crisis three weeks ago and has since faced regulatory investigations, including a hearing convened by the Chamber’s Financial Services Committee.
Robinhood had to withdraw his credit lines and raise $ 3.4 billion from his sponsors to place more guarantees with Depository Trust & Clearing Corp., the industry’s clearinghouse. The DTCC wanted members to post more money to make sure they could trade, given the big swings in stocks, including video game retailer GameStop and movie theater chain AMC Entertainment Holdings Inc.
Robinhood is also facing political and customer reactions because he has temporarily restricted GameStop trading and other actions.
Robinhood Financial said in a filing on Friday that it is in negotiations with the Financial Sector Regulatory Authority to end an investigation into application disruptions and options trading in March 2020. The United States Securities and Exchange Commission and the FINRA are reviewing how Robinhood displays cash and purchasing power to clients and their options trading approval processes, according to the document.
The company is considering selling some of its shares in its IPO directly to its own users, Bloomberg News reported. Such a move would be surprising because retail investors are often unable to buy new listings at the offer price. Instead, they usually need to invest on the first day of trading in a hurry, which can raise the stock price.
(Updates with the FINRA review of 2020 issues in the eighth paragraph.)
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