Robinhood (HOOD) stock closed down on Thursday after a rocky start for the popular, though divisive, online trading app.
How did it perform on day 1?
The online stockbroker began trading at $38 per share, at the bottom of its range, valuing the business at $32 billion. Robinhood’s market value was about $29 billion after falling as much as 10% and ended the day at $34.82.
The online brokerage, which trades under the ticker HOOD for the first time, has entered the public markets it aims to democratise for novice investors.
On Wednesday evening, Robinhood, a stock trading app that has grown in popularity among retail investors, sold shares in its first public offering at $38 a share. Robinhood is worth 10.5 times expected EBITDA.
The business raised over $2 billion by selling 52.4 million shares. Vlad Tenev and Baiju Bhatt, co-founders, each sold roughly $50 million worth of shares, but will keep roughly 65 percent of the voting rights. In September, the firm was valued at $11.7 billion in the private markets.
Late Wednesday, Robinhood sold 55 million shares at $38, the lower end of its $38 to $42 objective, raising $2.1 billion and valuing the company — and its 21.3 million monthly active users — at $31.8 billion.
The investment banks that drove the deal were Goldman Sachs and JPMorgan Chase. An extra 5.5 million shares will be available for purchase by underwriters.
Robinhood was valued at roughly 15 times its revenue “run rate” for 2021, which is based on a first-quarter total of $522 million. Given the 83 percent increase in active users since the end of December, investors may expect quicker revenue growth and potentially a higher multiple in the months ahead.
Regardless of today’s debut, co-founders Vlad Tenev and Baiju Bhatt, former Stanford University roommates who developed a platform idea in 2013 that has captured both the current retail trading zeitgeist while luring one of Wall Street’s most valuable assets away from Wall Street giants: young investors, have had an incredible success.
Robinhood claimed it made $959 million in revenue last year, up 245 percent from the previous year, and that it had 17.7 million active users on the platform with $81 billion in assets.
Robinhood rose significantly this year
As of March 2021, Robinhood — which provides stock, cryptocurrency, and options trading as well as cash management accounts — had 18 million customers, up from 7.2 million in 2020, a 151 percent gain. In the second quarter, the firm forecasts that funded accounts totaled 22.5 million.
In the second quarter of 2021, Robinhood expects its 18 million retail clients and more than $80 billion in customer assets to have grown to 22.5 million users and more over $100 billion.