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(Bloomberg) – Robinhood Markets Inc., the trading platform behind the surge in GameStop Corp. shares, plans to confidentially file an initial public offering as early as March, according to people familiar with the matter.
The company held talks with underwriters last week to move forward with a deposit in the weeks, said the people, who asked not to be identified because the matter is not public. No final decision has been made and the timeline could change, the people said.
Robinhood, valued at $ 11.7 billion in a funding round last year, has raised funding this year that will convert to shares in an IPO. A first tranche will be converted at a valuation of $ 30 billion or a 30% discount to the IPO, whichever is lower, the second to the lower of the 30% discount or a 30% discount. valuation of $ 33 billion, Bloomberg reported.
A representative for Robinhood, based in Menlo Park, Calif., Declined to comment.
Robinhood has exploded in popularity during the pandemic as homebound youth turned to its trading app to make money and pass time. The company, which has been targeting an IPO in 2021 for at least last year, experienced a cash flow crisis three weeks ago and has since faced regulatory inquiries, including a hearing convened by the services committee. House finances.
Robinhood had to cut its lines of credit and raise $ 3.4 billion from its lenders to deposit more collateral with the Depository Trust & Clearing Corp., the industry’s clearinghouse. DTCC wanted members to post more money to ensure they could clear trades, given wild swings in stocks, including video game retailer GameStop and movie chain AMC Entertainment Holdings Inc.
Robinhood is also facing political backlash and customer backlash as it has temporarily put the brakes on GameStop trading and other actions.
Robinhood Financial said in a filing Friday that it is in talks with the Financial Industry Regulator to settle an investigation into application crashes and options trading in March 2020. The States Securities and Exchange Commission United and FINRA are reviewing how Robinhood displays liquidity and purchasing power to clients and its option trading approval processes, according to the filing.
The company plans to sell some of its shares during its IPO directly to its own users, Bloomberg News reported. Such a move would be striking as retail investors generally cannot purchase new listings at the offer price. Instead, they usually have to invest on the first day of trading in a rush that can cause the share price to go up.
(Updates with FINRA Exam Questions 2020 in the eighth paragraph.)
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