IPO Securities Trading App Robinhood Files

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Robinhood Markets Inc., the popular securities trading app, has filed paperwork with the Securities and Exchange Commission for what is sure to be one of the most anticipated initial public offerings of the year.

Robinhood announced the filing, which it made confidentially, in a statement Tuesday. As usual, the company did not disclose any details in the filing.

A pioneer in easy, commission-free trading, Robinhood is expected to hold an IPO soon. The filing, which a person familiar with the matter said was filed on Monday, puts the company on track to start trading publicly by the end of the second quarter, a timeline it presented to investors during the looking for a quick injection of capital earlier this year.

The eight-year-old company was forced to seek the funds when a surge in activity on its platform, driven by ferocious stock buying of so-called memes like GameStop Corp.

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– prompted the clearinghouse that handles Robinhood’s transactions to ask it to pay out billions to cover potential losses.

Robinhood eventually raised $3.4 billion, mostly from existing investors. An IPO would allow the company to raise additional capital to serve as an additional cushion and fund growth.

Investors clamored for shares of Robinhood in private markets, pushing its valuation to $12 billion in a funding round in August. That was before the explosion of interest in the app caused by the coronavirus pandemic, as individuals stuck at home during lockdowns turned to day trading – and before the IPO market in stock market is reaching new heights this year.

More than $126 billion has been raised in IPOs this year, far exceeding all cumulative totals from the previous year, according to Dealogic. Robinhood would join a rush of companies seeking to tap public investors’ voracious interest in new stocks since late last year, including dating app operator Bumble. Inc.,

Airbnb online property rental company Inc.

and digital food delivery provider DoorDash Inc.

Robinhood has been a magnet for controversy, and it remains to be seen whether that will temper public investor interest. Measures to restrict trading in GameStop and others at the height of the frenzy have drawn howls of protest from customers and further scrutiny from regulators.

Robinhood was already in the crosshairs of the SEC. In December, the company agreed to pay $65 million for allegedly misleading customers for years over its reliance on “payment for order flow,” or routing orders to high-speed merchants for a fee.

As millions of new traders sign up for the Robinhood investing app, the company is coming under scrutiny for allowing some inexperienced users to make risky bets. WSJ spoke with a financial education professional and two Robinhood traders about how the app is disrupting the brokerage industry.

Write to Maureen Farrell at [email protected]

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Appeared in the March 24, 2021 print edition as “Trading App Robinhood Files IPO”.

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