Robinhood Markets Inc. is going to file confidentially for an initial public offering (IPO). Sources from Bloomberg said the company is looking to do it as sooner as possible.
Robinhood IPO in March?
The announcement might come as a sudden. Robinhood, though, is said to have been holding discussions for the IPO in the past week. The company has also planned for an IPO in 2021 since last year. While Robinhood is looking to file for the IPO as soon as March, the company has not finalized the decision yet. Thus, there might be a change and delay in the timing of the IPO.
Accordingly, Robinhood will be transforming the financing raised in 2021 to equity in an IPO. To note, Robinhood was valued at $11.7 billion in a funding round last year, Bloomberg reported. The company plans to convert the first tranche at a $30 billion valuation or a 30% discount to the IPO. The decision will follow whichever goes lower.
Robinhood’s representative refuses to comment upon the matter.
Why hurry?
Robinhood was one of the main characters behind GameStop’s surging stock. Soon after the app received the spotlight, Robinhood easily attracted more young people stepping into investing for the first time. However, regulatory inquiries issues and a hearing convened by the House Financial Services Committee, political and customer backlashes also hit Robinhood hard.
Pressed by the Depository Trust & Clearing Corp’s requirements update, Robinhood had to draw down its credit lines. Additionally, Robinhood had to raise $3.4 billion from its backers. With the extremely fluctuating stocks, the DTCC want members to post more cash as proof that they could clear trades.
Robinhood is also looking to sell some of its shares from IPO directly to its own users. A refreshing move to see, as retail investors usually need to invest on the first day of trading, which later drives the stock price higher. Robinhood’s plan, however, could allow retail investors to purchase the stock at the initial price offered.
Read also: GameStop Trading Halt Puts Robinhood in a Bad Place
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