The Robinhood Markets Inc. trading app expects its upcoming public offering to give it a market value of around $ 33 billion, below the previously anticipated level.
The Menlo Park, Calif., Company plans to sell about 52.4 million shares of the offering, and other shareholders would sell about 2.6 million, priced between $ 38 and $ 42 each. In the middle of the bidding range, Robinhood would raise around $ 2 billion. The shares are expected to start trading at the end of next week.
Millions of individual investors have flocked to Robinhood this year to take advantage of the rally in meme stocks such as GameStop. Corp.
and cryptocurrencies like dogecoin. Its IPO is one of the most anticipated of the year and is expected to value the company at $ 40 billion or more. Robinhood last sold shares to early stage investors in 2020 at a valuation of nearly $ 12 billion.
Robinhood’s growth continued in the second quarter, driven by new users opening accounts and an increase in cryptocurrency options and trading. The company expects second-quarter revenue of between $ 546 million and $ 574 million, more than double what it generated a year earlier. The number of funded Robinhood accounts increased by 4.5 million between the end of March and the end of June, reaching 22.5 million in total.
But the company’s growth is slowing from the breakneck pace at the start of the year. On the stock market, it recorded a decline in activity compared to a year earlier. This slowdown is expected to continue, Robinhood expects overall third quarter revenue to be below the second quarter level.
At $ 33 billion, Robinhood would be valued at around 20 times its revenue in the 12 months ending June 30, and around $ 1,500 per funded account. In contrast, rival brokerage firm Charles Schwab Corp. is valued at around $ 4,000 per active account, although Schwab’s clients hold significantly more assets than Robinhood’s clients.
Robinhood reiterated that it plans to sell its users between 20% and 35% of its IPO shares, or up to 18.3 million shares. As early as Monday morning, Robinhood users could apply for shares in the company’s upcoming IPO through its app. On Saturday, the company will host a live touring presentation for individual investors, who can submit questions to executives.
Robinhood also said that the venture capital arm of Salesforce.com Inc.
was interested in buying up to $ 150 million worth of its shares at the IPO price.
Managing Director Vlad Tenev and Robinhood co-founder Baiju Bhatt will together retain nearly two-thirds of the company’s voting rights as a result of the offer. Each has a special class of shares that entitles them to 10 times the voting rights of the ordinary shares that Robinhood plans to sell as part of the IPO. MM. Tenev and Bhatt, along with Robinhood CFO Jason Warnick, plan to sell up to $ 110 million of their company’s stock as part of the offer.
—Matt Grossman contributed to this article.
Write to Peter Rudegeair at [email protected]
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