Robinhood Markets priced its initial public offering at the low end of a marketed range to raise $2.1 billion in a muted showing for one of the year’s most highly anticipated listings.
The trading app company and some of its investors sold 55 million shares on Wednesday for $38 each, according to a statement. Shares of the company at the centre of this year’s meme stock frenzy had been offered for $38 to $42 each.
The company has a market value at the IPO price of just under $32bn based on the outstanding shares listed in its filings. Accounting for employee stock options and similar holdings, Robinhood’s fully diluted value would be closer to $33bn. That compares to a diluted valuation of more than $36bn that it would have had at the top end of its price range.
The price indicates investors weren’t clamouring to buy Robinhood’s stock the way they had with some of the year’s hottest offerings. Still, a lower price in the IPO could allow more room for the “first-day pop” craved by investors when the stock begins trading on Thursday.
The IPO is the seventh-biggest on a US exchange this year. Listings since January 1 have already reached an all-time record with 688 companies raising a combined total of more than $228bn, according to data compiled by Bloomberg.
As a publicly traded brokerage, Robinhood will join the ranks of Coinbase, a cryptocurrency trading platform that debuted this year and is currently worth $50bn, and industry heavyweight Charles Schwab, which bought competitor TD Ameritrade last year and has a market value of $128bn.
Robinhood’s co-founders, chief executive Vlad Tenev and chief creative officer Baiju Bhatt, will together control most of the shareholder voting power in the company, according to its filings with the US Securities and Exchange Commission.
The company’s top shareholders are venture firms DST Global, Index Ventures, New Enterprise Associates and Ribbit Capital. Each group owns more than 5 per cent of its stock leading into the offering.
Salesforce Ventures, the investment arm of Salesforce.com, had expressed interest in purchasing up to $150 million of the shares at the IPO price, according to Robinhood’s filings.
Robinhood caught on during the coronavirus pandemic as homebound young people turned to online trading to pass time and make money. Its monthly active users have more than doubled in the past year, with 17.7m as of the first quarter, up from 8.6m in the same period in 2020.
The Menlo Park, California-based company had said it would reserve 20 per cent to 35 per cent of its Class A shares for its customers.
Robinhood’s increased popularity has led to scrutiny from politicians and regulators, who are focused on the so-called gamification of trading and its role in the meme-stock phenomenon. At the height of the volatile January frenzy over stocks like GameStop, the company had to raise billions of dollars from its backers.
It disclosed its financials for the first time in its July 1 public filing, which showed the company generated net income of $7.45m on net revenue of $959m in 2020, compared with a loss of $107m on $278m the previous year.