Robinhood’s initial public offering valuation estimate currently exceeds what most experts predicted. The company at the heart of the meme stock boom is preparing one of the most anticipated market listings of the year and seeking a valuation of up to $35 billion.
Robinhood remains one of the most popular investment apps and platforms and it had around 13 million users in 2020. Still, many agree that the valuation is perhaps a bit optimistic. For reference, Morgan Stanley acquired E-Trade last year for $13 billion, a brokerage that far exceeds Robinhood’s assets under management.
Another concern is Robinhood’s recent turbulence regarding service shortages and other negligence. Finra ordered Robinhood to pay a $56 million fine in connection with numerous instances of failing to comply with regulations.
But, Robinhood remains undeterred and had even expected a valuation approaching $40 billion in the past.
IPO share prices are expected to be in the $32 to $42 range, with 55 million shares offered in the IPO. At that price, the IPO should raise around $2.3 billion. However, the company’s founders and principals will offer approximately 2.63 million of those shares, and proceeds from those will not go to Robinhood.
According to the filing, Salesforce.com’s parent company will aim to purchase around $150 million of Class A common stock at the IPO price. Robinhood also plans to reserve up to 35% of the shares for users of the investment app but may reserve as little as 20% depending on demand from other investors.
Robinhood held a public event to answer questions about the IPO where the cofounders revealed the company was planning cryptocurrency wallets and offering IRA and Roth IRA retirement accounts among its products.
Overall, the event didn’t answer many of the questions institutional investors needed to know but laid out a promising future roadmap for the platform.