Robinhood claims $35 billion valuation in its IPO: Here are the 5 most intriguing revelations from the filing

But to get to that nosebleed number, Robinhood co-head Vladimir Tenev and his team will have to answer many of the questions posed in July 1 filing for IPO.

Like most major IPOs of the time, it was underwritten by all the big banks—Morgan Stanley, in this case excluded—and even larger numbers, profits are theoretical until now, and the company’s founders will retain a large amount of control, thanks to the proposed structure of the equity offerings.

But the $12 billion company that wants to “democratize finance for all” has mentioned some big items that are worth discussing. Here are five revelations that have really given our eyeballs a workout, plus one more on Monday:

Robinhood’s recent growth has been amazing, especially for a more growth sales company

The word “growth” is mentioned 217 times in Robinhood’s S-1 filings, which makes sense considering that it had nearly 18 million users at the end of March, a 107% increase year-over-year. last year, echoed by its skyrocketing revenue, up more than 311% year-on-year.

Take a look at some of that growth:

More on the rise of crypto then, but for now just explore the breadth of what appears to be Robinhood’s ability to cash in on the retail trading boom that has been sparked by hundreds of millions of people. trapped inside in a century-old global pandemic as the stock market rallied in an unprecedented parabolic pattern from March 2020 to March 2021.

And note that what we’re looking at includes a short-term drop in January on stocks like GameStop.
GME,
+2.63%

and AMC Entertainment
AMC,
-0.97%

that saw retail investors become major players, often using apps like Robinhood, and cemented what we now know as the “meme stock” boom in the mind. public awareness.

Multi-citation data page: Keep tabs on all so-called meme stocks in one place

But Robinhood’s record is clear in its pitch that the best is yet to come – and even further growth can be found in a world where people are finally leaving their homes after 16 months of boredom. The depression and frost around the retail business has subsided.

Expansion into Asia and Europe is a clear part of this plan, as is the belief that wider adoption of personal investing is an organic next step in the personal finance arena. But it should be mentioned that some of Robinhood’s hardcore retail investors abandoned the platform after it had to pause trading in some stocks meme at the peak of January squeeze.

While that stock market phase made Robinhood a household name, it also made the company’s co-founder, Vlad Tenev, a witness in a congressional hearing and let more retailers know that this app is not for them. The company is giving away 20% to 35% of its shares to retail investors to buy, but it may not be an easy sell in the current climate.

On the Reddit forum WallStreetBets, a discussion about Thursday’s offering led users to discuss how they could shorten Robinhood’s IPO, with many still angry about January.

And speaking of anger…

A lot of people are suing Robinhood. Liked, very much.

It’s not common to see six pages of pending litigation disclosures in an IPO, but that’s the case with Robinhood.

In addition to revealing last month that it will pay close to 70 million dollars to settle the claims by the Financial Industry Regulatory Authority that they distributed false and misleading information to clients, did not do due diligence on approving options accounts for new traders, and did not provide data full market for users, Robinhood also admitted on Thursday that its attorneys are busy. .

More than 50 class-action lawsuits were filed against the company regarding January’s trading restrictions, with three individual actions also on the books for good measure. Apparently there are also some issues with the Securities and Exchange Commission’s antitrust division and the U.S. attorney’s office in Northern California, which subpoenaed the company and executed a subpoena on its cell phone. Tenev.

Then there are accusations from a state regulatory agency in Massachusetts that the company violated three state securities laws; from New York’s plunge into the possibility of money laundering and cybersecurity breaches; from 2,000 users in the class action said their accounts were hacked; in 15 class actions about Server down in March 2020 that caused country headlines and users to be frozen from their trading accounts during a market crash; in six class-action lawsuits by users who allege Robinhood’s controversial pay-to-order flow model misled them from their best trading practices; a Finra poll on the same issue; and disclosure of a settlement in a civil action death of 20-year-old Robinhood user Alex Kearns, who committed suicide after seeing an unstable options trade on his account that cost him more than $700,000.

But that’s mostly because of Robinhood’s legal troubles leading up to the IPO… in addition to a few SEC problems – and several other lawsuits.

The future of Robinhood is all about not repeating its past

One key takeaway for anyone reading the offering document is that Robinhood is learning from all those legal mistakes, so “safety,” “surveillance,” and “education” are the words. hot new key at a company once known for tossing virtual confetti every time. a user made a transaction on the phone.

And while the company still generates 81% of its revenue through order-line payments, it clearly wants to give a story of its development to potential investors. From S-1:

At Robinhood, our value is customer service. The following values ​​describe the company we aspire to be.

• Safety first. Robinhood is a company that prioritizes safety.

• Participation Is Power. In Robinhood, the rich don’t get a better deal.

• Progressive Customer Focus. We exist to make our customers happy.

• First Principle Thinking. We bet boldly and challenge the status quo.

After spending the past year fending off criticism for its business model, stepping up its technology in the face of massive user growth, turning to information and support better for customers who always seem to care about them and paying fines to multiple regulators, Robinhood hasn’t been shy about wanting people to know it’s learned its lesson in playing it safe, or at least is safer.

Well, aside from one important thing…

Forget Elon; The real ‘father’ is Vlad Tenev

According to Robinhood’s profile, trading dogecoin
DOGEUSD,
-1.49%

accounted for 34% of the company’s entire crypto trading revenue in the first quarter of 2021, a sizable jump from the 4% it accounted for in the fourth quarter of 2020.

Taking into account that Robinhood also revealed that it is holding close to $12 billion in crypto on its books, it seems the company may be holding close to $4 billion in doge, or about 7% of the total. coins currently in circulation.

But while some point to the volatility of a cryptocurrency created as a joke about the dog meme, we want to mention that this massive holding makes Elon Musk’s doge tweets almost as irrelevant, because why listen to a guy building electric cars and space rockets when Robinhood can be like MarketWatch’s Mark DeCambre expertly speculates, The promised dogecoin whale?

The average Robinhood user was born in the 90s

From S-1:

As of March 31, 2021, approximately 70% of our AUC comes from customers on our platform between the ages of 18 and 40, and the average age of customers on our platform is 31.

So the people this company is relying on for the kind of financial mercenary that will power a billion dollar trading platform has been born. after “Dallas” went out into the air?

Brave.

Free ice cream: Even Robinhood thinks the retail boom may be over

In its second filing, the company warned potential investors that it has seen some of its retail business deflate, and went as far as to say explicitly that it expects “our revenue in The three months ending September 30, 2021 will be lower, compared to the three months ending June 30, 2021, due to reduced levels of trading activity. “

That’s a great admission from a company that, it should be repeated, is selling a growth story on top of a growth story.

Forgot about that? Well, let’s start over and read again… we’ll wait.