Robinhood seeks $35B valuation in upcoming IPO

Trading app Robinhood is reportedly seeking to raise $2.3B in an upcoming initial public offering (IPO).

Why should we care?
Robinhood, which offers equity, cryptocurrency, and options trading, is expected to make a public debut this week. The company has taken flak in recent years in response to controversies, including its decision to freeze trading on Gamestop shares earlier this year. It’s also under scrutiny for its practice of payment for order flow. Robinhood recently agreed to pay a $70M fine in a settlement with the Financial Industry Regulatory Authority (FINRA) for misleading communication and trading practices. Despite these challenges, Robinhood’s revenue is soaring. According to a regulatory filing, in the first quarter of 2021, Robinhood reported revenue of $522M, up 309% year-over-year. Meanwhile, the company reported a net loss of $1.4B. Trends in the company’s favor, it says, include growing participation in the financial markets. Among the risk factors, the company listed harm to its brand and reputation, regulatory investigations, and consequences Robinhood could face if capital levels required by regulators and self-regulatory organizations are not maintained.