Robinhood falls short of $35bn valuation target in subdued IPO debut
Online brokerage and trading fintech Robinhood has had a bumpy start to life as a publicly-traded company.
Robinhood hit a final valuation of $32 billion
More than 49 million shares worth $1.8 billion were sold in the first half hour of trading, yet the price fell by as much as 12% before recovering.
Robinhood opened at a price of $38 per share, but saw that figure dip to $36 just before the close of trading on Friday.
The trading fintech aimed for a valuation of $35 billion but fell short with a final figure of $32 billion. That number still makes the IPO one of the most valuable this year.
Up to 35% of the company’s new shares were made available for customers. It did this through the new “IPO access” feature on its app.
Yet Robinhood’s share structure is dual class: each share sold to both retail and institutional investors is worth one vote, while each held by co-founders Vlad Tenev and Baiju Bhatt are worth 10.
As a result, the two men will control around 65% of the votes in the company, despite owning only 16% of the shares.
Dual class share structures are not uncommon. While 85% of companies which went public in the US use “one share, one vote” systems, some notable exceptions – like ride hailing firm Lyft – exist.
Robinhood’s revenue grew by 245% to $959 million last year on the back of increased usage figures and its central role in an explosion of retail trading.
That prominence has led to the firm becoming the centre of a number of controversial investigations and allegations.
Last month, the US Financial Industry Regulatory Authority (FINRA) levelled a $57 million penalty against Robinhood.
The sanctions represent the largest financial penalty ever ordered by FINRA, which it says reflects “the scope and seriousness of the violations”.
The regulator found issues with the way Robinhood portrayed information to customers, the methods through which it approved options trading, and the technology it uses to provide broker-dealer services.
In July, the fintech’s cryptocurrency arm said it expects to pay $30 million to settle a New York-based probe into its cybersecurity and money laundering practices.
The payout comes as part of a proposed deal to cease an investigation by watchdogs into its security procedures.
