The securities broker is worth 32 billion dollars when it goes public – less than expected.
The securities broker Robinhood raised around 2.1 billion dollars (1.8 billion euros) when it went public in New York. The company announced on Thursday night that it had sold 55 million shares for $ 38 each. Thus, the broker brings it to a valuation of almost 32 billion dollars before the start of trading on the Nasdaq tech exchange. Over the course of the day, the shares then fell as low as $ 33.35 and were around twelve percent below their issue price. This means that the company is still valued at around 28 billion dollars, about as high as Deutsche Börse.
But in view of the high expectations before the premiere, that’s rather poor. Robinhood had marketed its shares in the price range of up to 42 dollars and was actually aiming for a total valuation of 35 billion. However, the discount broker reserved up to 35 percent of its newly issued shares for its own users in an unusual action. As a result, the debut is considered to be more unpredictable than normal IPOs: There, the investment banks usually try to ensure a regular process and stable prices.
Robinhood lists its papers under the ticker symbol “Hood” on the Nasdaq. According to the financial service Bloomberg, it is the seventh largest US IPO this year. Robinhood more than doubled its number of users in the past year. In the second quarter it was already 22.5 million.
The company from Menlo Park, California, founded in 2013, pioneered the younger generation of investors in the US financial market with its easy-to-use app for trading stocks, options and cryptocurrencies. Robinhood, however, has a controversial business model. The broker does not take any fees from users, but earns money by brokering their transactions. Critics accuse Robinhood of encouraging customers like a gambling provider to do as much and risky trading as possible. The company defends its business model by “democratizing” the financial market.