Robinhood, at the heart of retail trading frenzy, files for IPO

Robinhood had considered going public through a direct listing in the weeks leading up to the filing.
Robinhood had considered going public through a direct listing in the weeks leading up to the filing.PHOTO: AFP

BENGALURU (REUTERS) - Robinhood Markets, the online brokerage at the centre of the historic retail trading frenzy that gripped Wall Street this year, has confidentially submitted plans to regulators for a US initial public offering (IPO), the company disclosed on Tuesday (March 23).

The move to push ahead with a stock market flotation comes in the middle of a historic boom in US capital markets, fueled largely by dealmaking through so-called special purpose acquisition companies (Spacs).

Companies have raised well over US$100 billion (S$134.6 billion) through IPOs in the first three months of the year and are poised to overtake 2020's record haul of US$167 billion, data from Refinitiv and Dealogic showed. The amount raised includes blank-cheque IPOs.

Reuters reported in December that Robinhood had picked Goldman Sachs Group to lead preparations for a stock market flotation.

The company is yet to determine the number of shares to be offered and the price range, it said in a blog post.

Robinhood had considered going public through a direct listing in the weeks leading up to the filing, people familiar with the matter said.

In a direct listing, a company does not sell any shares in advance of its market debut, as is the case with IPOs.

Robinhood was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. The company's platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies.

The platform's easy-to-use interface has made it a go-to for young investors trading from home during coronavirus-induced restrictions and its popularity soared during the retail trading frenzy.

The company, however, faced criticism after it was forced to curb trading in certain stocks during the social-media fueled trading frenzy due to a 10-fold rise in deposit requirements at its clearinghouse.

It was forced to raise a whopping US$3.4 billion in emergency funds after its finances were strained due to the massive jump in retail trading.

The funding rounds were led by Ribbit Capital and included existing investors ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates. The latest financing valued Robinhood at around US$30 billion, according to people familiar with matter.

Robinhood is currently being probed by US regulators over its temporary trading curbs on the so-called "meme stocks". The company has set aside US$26.6 million for a potential settlement around trading outages in March 2020, as well as its options trading policies.