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Robinhood priced its stock at $38 per share, which is the low end of its target range, reflecting weak investor demand for the highly anticipated IPO of the popular trading app.
The company’s goal is to sell 55 million shares, and its stock price range is set at $38-42. Although the hottest technology IPO prices are usually higher than expected, Robinhood’s value shows that investors’ interest in this broker’s stock is not insatiable.
The final issue price of $38 announced late Wednesday puts Robinhood’s valuation at $31.7 billion.Private investor Previously valued The market value in August exceeded US$11 billion. The stock is expected to begin trading on the Nasdaq stock market on Thursday.
Robinhood, headquartered in California, becomes Selected venue For many first-time stock investors, it offers commission-free transactions and encourages these transactions through rewards, bonuses and push notifications. The average age of its customers is 31 years old. Compared with mature online brokerage companies such as Schwab, Fidelity and ETrade, its customers are generally younger and have fewer account balances.
It has recorded explosive growth, having doubled the number of accounts on its platform to 31 million since the beginning of the year.
However, Robinhood has also been criticized by regulators for its app’s game-like features, limited customer service, and reliance on a controversial sales transaction (called order flow payment). In June, the Financial Industry Regulatory Authority imposed a $70 million fine on Robinhood for causing “extensive and significant harm” to customers. This is the largest fine in Finra’s history.
This issuance will allocate up to 35% of the shares to its Own customersThe moderate interest in Robinhood’s IPO shows that investors are not immune to recent high-profile scrutiny and concerns about how the brokerage company will maintain its high trading volume in a post-pandemic world where people have time for other activities.
The Robinhood issue paved the way for a windfall for its executives and investors. According to the IPO price, Robinhood co-founders Baiju Bhatt and Vlad Tenev will own shares worth US$3 billion and US$2 billion, respectively.
Index Ventures, the company’s largest external investor, will hold shares worth US$3.2 billion.
Robinhood’s extraordinary growth caused regular technological disruptions during periods of increased trading volume, and during the sharp rise in the share price of meme stock GameStop in January, the platform had to suspend trading and raise billions of dollars to meet capital requirements for market makers.
Investors who provide US$3.5 billion in emergency funding can obtain shares at a price 30% lower than the issue price because their debt is converted into equity.
Bhatt and Tenev will retain majority voting control over Robinhood through a dual-shareholding structure, which means that although they hold less than 20% of the company’s shares, they will have at least 65% of the voting rights.
Despite Robinhood’s recent strong performance, institutional investors see this high level of voting control as a problem for participating in this offering.