Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Robinhood files confidentially for IPO despite disastrous start to 2021

Robinhood files confidentially for IPO despite disastrous start to 2021

Robinhood filed confidentially for an IPO on Monday, a person familiar with the matter told CNN Business, a development that shows the trading startup is forging ahead despite a recent series of public-relations nightmares.

The filing, which Robinhood confirmed in a brief statement Tuesday afternoon, demonstrates how confident the company is in its growth prospects even after a disastrous few months that featured its CEO getting hauled before Congress and Michael Bolton appearing in a viral video about the platform's controversial business model.

The confidential IPO filing suggests that Robinhood plans to capitalize on the flurry of retail trading that the startup helped set off with its zero-commission business model.

Robinhood has selected Nasdaq to list its shares on, a separate source familiar with the matter told CNN Business. News of the confidential IPO filing was first reported by Bloomberg News.

A Robinhood spokesperson declined to comment.

Other prominent startups, including Airbnb, Lyft, Slack and Palantir, filed confidentially to go public. That route route allows companies to privately file a registration statement, known as an S-1, with the SEC for review -- without divulging their financial details for now.

Eventually, Robinhood will be required to release those numbers so investors can evaluate the company's growth trajectory and key risks. It will be at least several months before the S-1 filing is made public, one of the sources told CNN Business.

GameStop saga set off cash crunch


Robinhood set off a firestorm in January when it temporarily banned users from buying shares of GameStop and other stocks driven up by an army of traders on Reddit. Robinhood blamed the controversial restrictions on a demand from its clearinghouse to put up as much as $3 billion due to the market volatility.

Robinhood was forced to rapidly draw down its credit lines and swiftly raise $3.4 billion, underscoring the apparent liquidity crisis facing the startup.

The episode raised questions about Robinhood's business model and management team and tested the brand's loyalty among users.

Robinhood was also sued earlier this year by the family of a 20-year-old trader who died by suicide after he saw a negative balance of $730,000 in his trading account and mistakenly believed that was the sum of money he owed. The tragedy drew attention to the gamified nature of the Robinhood platform and the startup's customer service shortfalls.

Red-hot markets


Under normal times, Robinhood's stumbles might doom an IPO, raising questions about whether the company is ready for the limelight. But these aren't normal times.

Rock-bottom interest rates, combined with a surging interest from retail investors and optimism about the economic recovery, have set off a boom in financial markets. US stocks are trading near record highs, valuations are lofty and signs of market froth abound.

Investors are pouring money into blank-check companies known as SPACs, a trend that has recently been backed by professional athletes and other celebrities. Traditional IPOs are also very hot.

US-listed traditional IPOs have raised $34.9 billion so far in 2021, nearly five times what they raised through the same period last year, according to Dealogic stats as of March 19. That's the highest for this point of any year since 1995.

Over the past six months major companies including Coupang, Bumble, Snowflake, Airbnb and DoorDash all have skyrocketed in their first day of trading.

The average first-day pop for US-listed IPOs is 44%, the highest since the dotcom bubble in 2000, according to Dealogic.

A key question for investors scrutinizing Robinhood's books will be how its explosive user growth was impacted — if at all — by the GameStop saga.

Despite the controversy, January was a near record month for Robinhood app downloads, according to a late January report by JMP Securities.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×