Robinhood, at the heart of retail trading frenzy, files for own IPO

The finance trading app faced backlash over how it handled a high number of trades of meme stock GameStop in January

FILE - This Dec. 17, 2020, file photo shows the logo for the Robinhood app on a smartphone in New York. Stock trading app company Robinhood said Tuesday, March 23, 2021 that it has submitted a confidential plan to go public later this year. The company based in Menlo Park, Calif., filed the paperwork with the Securities and Exchange Commission while at the center of a battle between online activist retail investors and institutional investors over companies such as GameStop and AMC Entertainment. (AP Photo/Patrick Sison, File)
Beta V.1.0 - Powered by automated translation

Robinhood Markets Inc, the online brokerage firm at the centre of the historic retail trading frenzy that gripped Wall Street this year, has confidentially submitted plans to regulators for a US initial public offering, the company disclosed on Tuesday.

The move to push ahead with a stock market flotation comes in the middle of a boom in US capital markets, fuelled largely by dealmaking through so-called special purpose acquisition companies.

Companies have raised well over $100 billion through initial public offerings (IPOs) in the first three months of the year and are poised to overtake 2020's record haul of $167bn, data from Refinitiv and Dealogic showed. The amount raised includes blank-check IPOs.

Reuters reported in December that Robinhood had picked Goldman Sachs to lead preparations for a stock market flotation.

The company has yet to determine the number of shares to be offered and the price range, it said in a blog post.

Robinhood had considered going public through a direct listing in the weeks leading up to the filing, people familiar with the matter said.

In a direct listing, a company does not sell any shares in advance of its market debut, as is the case with IPOs.

Menlo Park, California-based Robinhood was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. The company's platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies.

The platform's easy-to-use interface has made it a go-to for young investors trading from home during coronavirus-induced restrictions and its popularity soared during the retail trading frenzy.

The company, however, faced criticism after it was forced to curb trading in certain stocks during the social media-fuelled trading frenzy due to a 10-fold rise in deposit requirements at its clearinghouse.

It was forced to raise a whopping $3.4bn in emergency funds after its finances were strained due to the jump in retail trading.

The funding rounds were led by Ribbit Capital and included existing investors ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates. The latest financing valued Robinhood at around $30bn, according to people familiar with matter.

Robinhood is currently being probed by US regulators over its temporary trading curbs on the so-called "meme stocks". The company has set aside $26.6 million for a potential settlement around trading outages in March 2020, as well as its options trading policies.