Robinhood lowers its IPO target but aims at $32bn valuation

29 Jul 2021

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The company, which has attracted millions of users to its app with a gamified approach to trading, is now set to start trading itself.

Ahead of its much-anticipated IPO, controversial trading app Robinhood priced its shares at the lower end of its target range.

The California-based company is debuting on the Nasdaq in New York today (29 July) under the ticker symbol HOOD.

It revealed last night that shares were being priced at $38, which is at the lower end of the $38 to $42 range Robinhood had been targeting. This price values the company at around $32bn.

While that figure is nearly triple the more than $11bn private valuation Robinhood received last August, it is below previous expectations for the IPO.

Some have suggested the share price could reflect investor hesitation, while others have said it could be a conservative bet by the company to set up a successful first day of trading.

The IPO is expected to raise around $2bn. Robinhood said that it aims to use the net proceeds for working capital, capital expenditures, anticipated tax obligations and increasing its employee base.

Robinhood was founded in 2013 and has made its name offering commission-free stock trading through its mobile app, with equity, cryptocurrency and options trading.

Its gamified approach has attracted millions of users, including many young and first-time investors. But its business model has also attracted plenty of scrutiny and it is facing regulatory sanctions and probes in the US.

The Robinhood app saw record levels of trading during the pandemic and amid the GameStop trading saga earlier this year.

Although the company came under fire for its role in the meme stock craze, the number of monthly active users on the app jumped from 11.7m at the end of December to 21.3m in June.

In its IPO prospectus, Robinhood revealed that it was profitable last year, with income of $7.5m on net revenue of $959m.

The trading app plans to involve its own users in its IPO, allocating up to 35pc of shares to retail investors who use the platform.

While Robinhood may have set its IPO price at the bottom of the expected range, it is still set to be one of the biggest listings on a US exchange this year. It follows in the footsteps of crypto trading platform Coinbase, which went public via a major direct listing on Nasdaq in April.

Sarah Harford was sub-editor of Silicon Republic