No-fee trading app Robinhood on Thursday revealed a massive $80 billion increase in client assets for its much-anticipated initial public offering amid the blockbuster pandemic escalation.
In an S-1 filing with the Securities and Exchange Commission, the controversial app said it plans to trade under the ticker “HOOD” on the Nasdaq after first turning profitable last year.
Robinhood, best known for playing a major role in the so-called “Reddit rally” that propelled Gamestop to new heights this year, more than doubled the number of accounts funded on its platform last year to profitability. Total funded accounts rose 151 percent to 18 million at the end of March, up from 7.2 million a year ago.
During the same period, assets under management more than quadrupled to $80.9 billion, from $19.2 billion.
Robinhood said it generated net income of $7.5 million in 2020 on net revenue of $959 million, compared to a loss of $107 million on net revenue of $278 million in the prior year.
The online brokerage also revealed it lost $1.4 billion in the first quarter of 2021 during the GameStop trading frenzy in January. The company booked revenue of $522 million in the first quarter, up 309 percent from the same period a year ago.
Still, Robinhood’s profitability will help differentiate it from several recent high-growth IPOs.
The company confirmed on Thursday that its underwriters will reserve between 20 percent and 35 percent of their Class A shares for retail investors through its IPO access platform.
And it warned investors that a variety of factors could disrupt its business model, including ongoing investigations and legal proceedings, a slowdown in business activity and regulatory action that helped Robinhood through a practice called Pay for Order Flow. Makes it more difficult to make money on trades. .
Indeed, the filing comes a day after the Financial Industry Regulatory Authority charged Robinhood with a record $70 million charge, alleging it misled clients about margin trading, which occurs when investors trade. borrow money for
The Menlo Park, California-based was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt, with the goal of making stock market investing more accessible by eliminating hefty commission fees.
While the app’s popularity has grown over the past 18 months, it is also facing increasing scrutiny and criticism from some who say it has sought to undermine the market.
Since 2015, more than half of customers who fund accounts on Robinhood said this was their first brokerage account, the company said in its filing Thursday.
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