The popular trading website, Robinhood Markets has raised $2.1 billion in its long-awaited initial public offering [IPO] after selling 55 million shares at $38 each, the low end of its $38-to-$42 price range. According to the official reports, the approach adopted by Robinhood was quote is unlike any other company going public.
The popular investing app is planning to make the most out of individual investors’ fascination with crypto-asset and stocks such as GameStop Corp which have witnessed erratic price swings after becoming the subject of trading speculation on social media platforms such as Reddit. Even after the infamous Gamestop blunder that shook the market, the number of monthly active users on the platform has remained unfazed. In fact, Robinhood saw a rise in these figures from 11.7 million at the end of December 2020 to 21.3 million as of the end of June 2021.
Robinhood had previously launched its IPO Access feature, in May this year. This feature offered retail investors the opportunity to purchase shares of some new issues before they begin trading on an exchange. As a result, market players were able to buy stock in firms such as FIGS [FIGS], F45 Training Holdings [FXLV], as well as Clear Secure [YOU].
Despite being one of the most valuable U.S. companies to have gone public year-to-date, Robinhood hasn’t stayed far away from controversies. The company was at the receiving end of intense scrutiny for its use of payment for order flow [PFOF], in other words, this refers to the practice of directing client trades to trading platforms that conduct the transactions and profit from the bid-ask spread.
Almost 80% of Robinhood’s first-quarter revenue originated from PFOF. Many are of the opinion that such practices discourage brokers from obtaining the best trades for their customers. Currently, the United States SEC is reviewing PFOF.
More recently, the company had also revealed that it was under the Financial Industry Regulatory Authority’s [FINRA], investigation for the non-registration status of its co-founders Baiju Bhatt and Vlad Tenev.