Robinhood Officially Files for Initial Public Offering
After previously confidentially submitting a draft registration statement in March, this week, Robinhood made it official, announcing its plans to go public. The number of shares Robinhood plans to issue and the price range they’ll be targeting have yet to be determined. What is known is that the FinTech will list on the Nasdaq under the ticker symbol $HOOD.
One interesting note in Robinhood’s filing is that the company plans to reserve “approximately 20% to 35%” of Class A shares to be offered to Robinhood users. This will be done via the recently-launched IPO Access feature. With IPO Access, Robinhood customers can request to buy shares of upcoming public offerings — although there is no guarantee that they’ll receive the number of shares they requested or any shares at all.
Of course, Robinhood’s announcement also comes during what’s been a turbulent year for the FinTech. This past January, the platform’s decision to temporarily halt sales of Gamestop, AMC, and other stocks not only led to scorn from customers but also brought on scrutiny from lawmakers and regulators. In fact, the Securities and Exchange Commission was investigating the episode and Robinhood CEO Vlad Tenev was brought before a Congressional committee to testify on the matter.
More recently, FINRA announced that Robinhood had agreed to pay fines amounting to $57 million plus approximately $12.6 million in restitution. These fines were the result of several issues FINRA found, including numerous service outages that affected users as well as confusion surrounding the platform’s margin products. Taking Robinhood to task, EVP and Head of FINRA’s Department of Enforcement Jessica Hopper said in a statement, “This action sends a clear message—all FINRA member firms, regardless of their size or business model, must comply with the rules that govern the brokerage industry, rules which are designed to protect investors and the integrity of our markets. Compliance with these rules is not optional and cannot be sacrificed for the sake of innovation or a willingness to ‘break things’ and fix them later.” Hopper added, “The fine imposed in this matter, the highest ever levied by FINRA, reflects the scope and seriousness of Robinhood’s violations, including FINRA’s finding that Robinhood communicated false and misleading information to millions of its customers.”
Despite the heat that Robinhood has taken in recent months, the platform has also continued to grow and gain investment. Because of this, its upcoming IPO seems to be a real wildcard. That said, a saving grace could be the shares it sets aside for its own customers. Will it be enough for $HOOD to take off? Stay tuned.