PYMNTS-MonitorEdge-May-2024

Robinhood Could File Confidential IPO Within Weeks

Stock trading platform Robinhood may soon trade as a stock itself, Bloomberg reported.

The Menlo Park, California-based company, which was central to the recent wild swing in the price of GameStop shares, has been in talks in recent weeks with potential underwriters and may submit confidential initial public offering (IPO) documents as early as March, Bloomberg reported, citing unnamed sources.

Various public reports put the value of Robinhood in excess of $10 billion.

A Robinhood spokesman refused to comment on a potential IPO, according to Bloomberg.

Robinhood has become enormously popular as home-bound young people turned to the fun-to-use platform. But trading spikes that caught the market off-guard, and some of Robinhood’s responses, have caught the attention of lawmakers and regulators.

In a routine filing with the Securities and Exchange Commission (SEC) required annually of all broker-dealers, Robinhood stated, in part, on Friday (Feb. 26): “Throughout the COVID-19 pandemic, we have seen substantial growth in our customer base, retention, engagement and trading activity metrics, as well as continued gains and periodic all-time highs achieved by the equity markets generally. As a result of the COVID-19 pandemic, market volatility, stay-at home orders and the distribution of government stimulus checks helped foster an environment that encouraged an unprecedented number of first-time retail investors to become our customers and begin trading on our platform.”

In the same filing, Robinhood also chronicled some of the investigations targeting the company due to trading restrictions it imposed in early 2021. According to the filing, they have come from: “the United States Attorney’s Office of the Northern District of California, the SEC’s Division of Examinations, FINRA, the New York Attorney General’s Office, other state attorneys general offices, and a number of state securities regulators, as well as several inquiries based on specific customer complaints. We have also received information requests from the United States Congress. We are cooperating with these requests.”

PYMNTS reported Friday that on March 17, Congressional lawmakers plan to hold a second hearing involving Robinhood and the rapid rise and fall of GameStop shares. The swings hit some hedge funds especially hard.

PYMNTS-MonitorEdge-May-2024