Robinhood’s stock trading software has grown in popularity among individual investors lately. They have no priced their initial public offering at $38 per share, valuing the company at over $32 billion.
Robinhood placed its shares at the low end of the $38 to $42 range ahead of its Nasdaq launch on Thursday. The business, which will list under the ticker name HOOD, raised nearly $2 billion by selling 52.4 million shares. Vlad Tenev and Baiju Bhatt, co-founders, each sold around $50 million in equity.
Robinhood has emerged as a critical entry point into the markets for young and inexperienced investors. The program, which provides equity, cryptocurrency, and options trading and cash management accounts, recorded trading volumes during the pandemic and the early 2021 meme stock mania.
As of the second quarter, Robinhood estimated that it had 22.5 million funded accounts. That is up from 18 million in the first quarter of 2021, a 151 per cent rise from the previous year. In September, the company has valued in the private markets at $11.7 billion.
Revenue
The deal’s top investment banks are Goldman Sachs and JPMorgan Chase. An extra 5.5 million shares will be available for purchase by underwriters. Robinhood predicted second-quarter revenue of $546 million to $574 million in its amended prospectus, up from $244 million in the second quarter of 2020. In the first quarter, revenue increased 309 per cent to $522 million, up from $128 million the previous year.
Goldman Sachs and JPMorgan Chase are the deal’s primary investment banks. Underwriters will be permitted to purchase an additional 5.5 million shares.
Revenue grew 309 per cent to $522 million in the first quarter, up from $128 million the previous quarter. Options trading contributes around 38% of revenue, while equities and cryptocurrency account for 25% and 17% of revenue, respectively. However, Robinhood warned that the brokerage’s trading revenue and account growth might decline if the retail trading frenzy cools.
Robinhood’s competitors include Fidelity, Charles Schwab, Interactive Brokers, and emerging providers such as Webull and SoFi. Charles Schwab has a market cap of $130 billion, whereas Interactive Brokers has a market cap of $26 billion. Robinhood’s most significant investors include DST Global, Index Ventures, NEA, and Ribbit Capital.
Millennial
Suppose you have an ETF that targets companies with a strong possibility of benefiting from the expanding buying power and particular tastes of the U.S. millennial population. In that case, it isn’t easy to imagine a more excellent fit than Robinhood. Millennials are driving Robinhood’s rise, and I could easily see the stock breaking into MILN’s top 10.
With the word consumer in its name, it’s reasonable to think that MILN is interested in inequities like Nike (NKE), Costco (COST), and Apple (AAPL) (AAPL). While those three are among the top ten in the fund, so are pure online platforms such as Amazon (AMZN), Snap (SNAP), Facebook (FB), and PayPal (PYPL). Robin Hood would be quite at home among this gang.
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