After years of teasing an initial public offering (IPO), the US brokerage company Robinhood Markets, Inc. might finally be going public as early as next month.
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What is Robinhood?
It's one of the most popular brokerage platforms over in the US, especially amongst younger Millennial and Gen-Z investors, with its services delivered online and via mobile app.
Robinhood was founded in 2013 by two college roommates, Vlad Tenev and Baiju Bhatt. Robinhood basically invented the practice of zero brokerage that is now ubiquitous in US markets. Over the years, it has expanded into options trading, banking and cryptocurrency trading.
Its central mission is to "democratise finance for all". Prior to Robinhood's entry into the brokering game, most US brokers charged a fee for share transactions – something we Aussie investors are still very familiar with.
It quickly took off and has remained at the vanguard of share trading ever since. Indeed, most US investors can probably thank Robinhood for pushing the entire industry towards a zero-brokerage model. Whether that's a good thing, on the whole, is still a divisive issue. But that's a debate for another time.
According to Forbes, Robinhood had more than 13 million users at the end of 2020. Another 6 million reportedly joined up in the first two months of 2021. Forbes also tells us that this has helped Robinhood's valuation on the private markets jump from US$20 billion at the end of 2020 to more than US$40 billion by February 2021.
Not without controversy…
Robinhood has been described as helping to 'gamify investing' or encouraging gambling-like behaviour among users.
During the GameStop (NYSE: GME) short squeeze saga earlier this year, it drew much criticism for banning the trading of GameStop shares for a short time when the squeeze was in full swing.
It also attracted controversy last year when investors exploited a glitch in its systems that allowed them to trade on infinite margins (i.e. borrowing unlimited amounts of money to invest in shares).
So, when will Robinhood IPO?
Robinhood's IPO has been in the works for a while now, but a report in today's Australian Financial Review (AFR) has suggested it could IPO next month.
Robinhood filed an IPO allocation in March and had planned a June listing. According to the report, the company is now eyeing the period following the 4 July public holiday in the US but a "final decision hasn't been made".
So, we'll have to wait until next month to see if Robinhood will finally join the share market in what could be one of the year's biggest IPOs. Watch this space!
