Robinhood could could be valued as high as $35 billion and raise as much as $2.3 billion in its upcoming initial public offering, according to an amended prospectus filing Monday.
The popular stock-trading app — which has become both a beacon and a lightning rod for the Reddit rally, as legions of rookie investors have used it to bet on risky, volatile stocks — said Monday it expects to price its stock between $38 and $42 a share.
A $40 stock price would bring in $2 billion and value the company at $33 billion, according to Monday’s filing. The company, which will list on Nasdaq under the ticker “HOOD,” will sell 52.4 million shares and its founders will look to cash in 2.6 million shares.
The San Francisco-based company’s filing also revealed key financial data that will give investors a better sense of the app’s growth potential. In the first quarter, Robinhood posted a loss of $6.26 a share on revenue of $522.2 million. Robinhood estimates they now have 22.5 million active users, or nearly double the 13 million users they had in 2020.
In a nod to its retail investors, Robinhood is setting aside around 30 percent of its shares so users can buy stock at its listing price before it begins trading.
However, the company will be seeking most of its capital from institutions and will begin the process of pitching investors, known as a roadshow, this week. Lead underwriters for the deal include Goldman Sachs, Citigroup, and JPMorgan.
Robinhood, which has been criticized for the “gamification” of trading, soared in popularity during the pandemic as stuck-at-home consumers looked for ways to spend their stimulus checks. But its decision to halt buying of Reddit rally favorite, Gamestop, earlier this year spawned a spate of congressional hearings.
Robinhood was accused of a conflict of interest in banning Gamestop buys because the “no-fee” app makes money through order flow paid by Wall Street firms like Citadel, which had a vested financial interest in GameStop’s decline.
Robinhood CEO Vlad Tenev, who has denied the allegations, was forced to defend the company’s actions in front of top political figures earlier this year.
The controversy resulted in newly tapped SEC chief, Gary Gensler, vowing to look at Gamestop’s business model, cautioning investors in a hearing earlier this month that there’s no such thing as a free app. “There are costs. It’s like an iceberg: Most of the iceberg is below the surface,” Gensler said. “The costs are below the surface.”