American financial services company Robinhood has submitted its S-1 document with the U.S. Securities and Exchange Commission (SEC) ahead of its upcoming IPO. The document, which was published on Thursday, provides some insight into the firm’s IPO plans, as well as some details concerning its stock and trading revenue.
Speaking of the IPO, the stock and crypto trading service is hoping to raise $100 million from its upcoming sale, an amount that may change in the future.
Upon listing, the stock will be available to trade on Nasdaq under the “HOOD” ticker. And according to the document, about 20% to 35% of the company’s shares will be available to retail investors.
As of press time, there was no specific date for the IPO. However, there were reports last week suggesting that Robinhood’s IPO would be delayed due to recent inquiries from the SEC over its crypto trading service. But this is not expected to be an issue since the leading U.S.-based cryptocurrency exchange Coinbase was given the green light to conduct an IPO early this year.
A dicey investment?
In addition to providing a few details on the upcoming IPO, the filing also dropped some interesting details about Robinhood’s performance and business activities.
Last year, the company generated $7.45 million of net income from net revenue of $959 million. While this may not appear to be much, it is a notable improvement considering the fact that the firm recorded a $106.6 million loss the previous year following revenue of $278 million.
From the look of things, the company might end 2021 on another negative note. In Q1 2021, Robinhood lost $1.4 billion due to the GameStop short squeeze after retail investors made coordinated investments in certain stocks and cryptos. The firm was quick to admit in its S-1 filing that it has “grown rapidly,” and its continued success would be hinged on effectively managing this growth.
If we are unable to manage our growth effectively, our financial performance may suffer and our brand and company culture may be harmed.
Robinhood’s varying success could make its upcoming stock particularly risky for retail investors. To an extent, the performance of Coinbase’s stock provides some insights in this regard. The COIN stock has continued to fall from its opening price of around $328.
As reported by BTC PEERS, the stock had a fairly decent performance after its direct listing on Nasdaq, settling at over 30% from its original reference price of $250. This was, however, short-lived as insiders began dumping the stock almost immediately. Coinbase CEO Brian Armstrong reportedly sold 749,999 shares in three separate sessions when the stock traded between $381 and $410. In total, he offloaded about $291.8 million in shares.
Turning to crypto for help
Although Robinhood was primarily a stock trading company, cryptocurrencies have grown to become a huge part of its business. The firm notes that about 17% of its activities this year involved cryptos.
The document also mentioned the fact that Robinhood does not allow investors to deposit or withdraw their digital assets. Investors can only redeem their cryptos for cash at the moment. According to the firm, enabling crypto deposits and withdrawals could lead to a “loss of customer assets, customer disputes and other liabilities, which could adversely impact our business, financial condition and results of operations.” There were reports in February suggesting that the company might enable this functionality.