Robinhood IPO expected in Q2

Text size

Robinhood Markets, the critically reviewed trading app

GameStop

trading, is moving forward with plans to go public, said four bankers and venture capitalists.

The startup’s IPO plans are on track and an offer is expected in the next few months, likely in the second quarter, three people said.

“The [Robinhood] The IPO is on full steam, ”said one of the bankers.

Goldman Sachs

(ticker: GS) advises on the offer, one of the people said.

An IPO would allow Robinhood to raise new capital while still allowing the company, once opened, to access funding, the people said. Robinhood was pressured to raise $ 3.4 billion last week after a buying spree forced the trading platform to increase the money it deposits with the clearing houses that process its trades.

The directors of Robinhood and Goldman declined to comment.

Founded in 2013, Robinhood offers commission-free trades in stocks, ETFs, options and cryptocurrencies as well as margin, PitchBook said. The company sends client orders to market makers such as Citadel Securities, Virtu Americas and G1X Execution services. It had 1,281 employees in 2020.

Robinhood said on Monday it added an additional $ 2.4 billion in a cycle led by

Ribbit Capital.

The funding came after the startup raised $ 1 billion from current investors last week.

The Menlo Park, Calif., Company has come under pressure after Robinhood’s limited trading of GameStop (ticker: GME) and other stocks. The move sparked outrage from its clients, investors and Wall Street. Even Rep. Alexandria Ocasio-Cortez (DN.Y.) and other lawmakers wrote about

Twitter

that Congress should take a closer look at Robinhood’s actions.

Robinhood tried to explain its actions, saying clearinghouse demands prompted the company to limit trading in certain stocks, according to a January 29 blog post. The company said the deposit requirements imposed by the clearinghouse were 10 times higher than the normal number and that Robinhood “had to take steps to limit the purchase of these volatile securities to make sure we could comfortably meet our requirements. ”

Robinhood’s fury at tactics hasn’t dampened its popularity. The app has been downloaded over a million times in the past week. This prompted a hedge fund executive to say that Robinhood’s IPO would always be a winner. “If they are more and more users and have a plan to resolve PFOF’s issues with Citadel, I think they can still go public with some haters of Twitter,” the executive said.

PFOF refers to payment for order flows. Trades on Robinhood are sold to market makers or to large companies like Citadel.

An IPO would provide an exit for Robinhood’s many investors. They include D1 Capital Partners, Sequoia Capital, NEA, 9 Yards Capital and Unusual Ventures. Some of Robinhood’s early backers, such as Index Ventures, Draper Associates, and Andreessen Horowitz, participated in the company’s $ 3 million funding round in 2013.

Index Ventures and Draper declined to comment. Ribbit, Sequoia, NEA, 9 Yards and Andreessen did not return messages for comment.

Write to Luisa Beltran at [email protected]