Robinhood, a popular trading app that has encouraged a new generation of investors to take part in equity trading, has reportedly hired giant Wall Street investment bank Goldman Sachs to lead the Fintech firm’s IPO.
Robinhood Markets will be working with Goldman Sachs (NYSE:GS) in order to prepare for its initial public offering (IPO) which may come in 2021 and could value the firm at over $20 billion, according to Reuters which cited sources familiar with the matter.
Robinhood’s IPO plans could materialize next year, but the sources clarified that the exact timing and valuation will depend on market conditions.
Robinhood was last valued at approximately $11.7 billion which was right after its private fundraising round (in September 2020). Such a significant increase in valuation could impact the growth of Robinhood’s platform, which has played a key role in popularizing trading among Millennials and Gen Z consumers. Many more people are now engaging with online platforms (including stock trading apps) following the COVID-19 outbreak due to nationwide lockdowns.
Robinhood has secured more than $2 billion in capital (to date) from several private investors, PitchBook data confirms. The firm’s backers include prominent VC investors such as Andreessen Horowitz, Sequoia and Ribbit Capital, and even celebrities such as Snoop Dogg and Hollywood actor Jared Leto.
The Menlo Park, California-headquartered firm was established back in 2013 by Baiju Bhatt and Vladimir Tenev. Robinhood, like many other Fintechs, is focused on “democratizing” finance. The company’s trading platform lets customers conduct zero-commission trades in stocks, exchange-traded funds (ETFs), options and digital currencies such as Bitcoin, Ethereum, among others.
The trading app’s popularity may have led to the increased volatility we’ve seen this year in stock trading, according to analysts. The increased appetite for new stocks may be due to historically low-interest rates, the excessive money printing by the US Federal Reserve, and the significantly increased use of all-digital platforms and services during the Coronavirus crisis.
As covered in October 2020, Robinhood had revealed that a “limited number” of its customer accounts had been compromised.
Hackers reportedly managed to gain access to Robinhood customers’ personal email accounts which are outside of the actual stock trading app. The hackers then allegedly used these email addresses to access the victims’ Robinhood accounts. Although Robinhood’s management didn’t mention exactly how many accounts had been compromised, a report from Bloomberg revealed that around 2,000 customers may have had their personal information stolen after their accounts were hacked.
Robinhood claims over 13 million users and managed to raise a total of $660 million through its Series G investment round (finalized in September 2020). However, the company has been investigated by the US SEC which had announced plans to fine Robinhood (in early September 2020) for making certain undisclosed deals with outside firms.