After dealing with a scandalous trading conflict that pitied it against GameStop earlier in the year, Robinhood Markets Inc. is targeting a valuation of up to $35 billion in its initial public offering in the United States. The company disclosed this in a filing on Monday, in a listing that will become one of the biggest in the year.
In January, the online brokerage was caught at the center of a confrontation between a new generation of retail investors and Wall Street hedge funds. Last month, the trading platform was fined $70 million by the financial industry regulatory authority (FINRA) over allegations that it caused customers “widespread and significant harm” on multiple different fronts over the past few years.
Reuters reported earlier that Robinhood was aiming for an IPO valuation of up to $40 billion. The filing reveals price and expected ownership of shares from individuals and companies including Salesforce.
About 55 million shares are being offered in the IPO to raise over $2.3 billion. Nearly 2.63 million of those shares are being offered by the company’s founders and chief financial officer, the filing showed. Proceeds from those will not go to Robinhood.
Shares are expected to be priced between $38 and $42, the company said.
Salesforce Ventures, the investment arm of software provider Saleforce.com Inc, is looking to purchase up to $150 million worth of Class A common stock at the IPO price, the filing showed.
Robinhood was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. They will hold a majority of the voting power after the offering, the filing showed, with Bhatt having around 39% of the voting power of outstanding stock while Tenev will hold about 26.2%.
The company’s platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies. Its easy-to-use interface made it a go-to for young investors trading from home during coronavirus-induced restrictions and its popularity has soared over the past 18 months.
The trading mania in the so-called meme stocks helped fuel a four-fold jump in its revenue over January to March, Robinhood’s IPO filing earlier this month detailed, but the quick expansion came at a cost as Reuters report reveals.
The company faced criticism after it was forced to curb trading in the middle of the surge this year in GameStop and other previously beaten-down stocks.
At the time, Robinhood was forced to raise $3.4 billion in emergency funds after its finances were strained by the massive jump in retail trading and a resulting jump in capital demands from clearing houses.
That round valued the company at around $30 billion, according to people familiar with the matter.
Robinhood’s stock market flotation comes amid a record 15-month run for the U.S. IPO market, as investors rushed to buy shares of high-growth tech companies.
The company plans to list on the Nasdaq under the symbol “HOOD”. Goldman Sachs and J.P.Morgan are the lead underwriters for the offering.