Tiger Global is reportedly leading a $200 million investment round in Public.com, a Robinhood competitor. at around a $1.2 billion valuation (quadrupling the firm’s value in only 2 months).
Public.com’s management noted that their massive $200 million round would give the firm a $1 billion “pre-money” valuation, BI reported while citing sources familiar with the matter.
The valuation is around 4x greater than the stock-buying app’s previous valuation from December 2020. Interest in Public’s platform and services has increased considerably after January 2021’s Robinhood and Reddit/GameStop related trading frenzy.
Investors have been trying to acquire stakes in other high-potential Fintech firms such as Public.com to capitalize on these unprecedented opportunities.
Public.com, which provides a fee-free trading app that also supports a digital investing community, will be receiving $200 million via an investment round that’s reportedly led by Tiger Global Management, according to sources. Public.com might be valued at around $1.2 billion “post-money” after the transaction has been finalized.
However, this valuation is not yet confirmed since the round is still in the process of being completed. Public.com’s management might consider raising even more capital, the sources claim.
A pre-money valuation is the value private investors decide to assign to the firm before they make an investment. The post-money valuation is the value after the new investment has been made.
Representatives for Public.com and Tiger Global Management have not yet provided any details on this transaction.
The most notable part of this new round is that the $1 billion-plus valuation is 4x (or more) what the firm was valued back in December 2020. As reported, Public.com had secured $65 million in funding via a Series C round last year.
Tiger Global would be leading the round with a $100 million investment, and the VC company Accel, which has led Public.com’s previous rounds, will also be taking part in the new round.
Other investors are reportedly eager to participate in the round as well (which means they’re trying to acquire shares) which may soon be finalized.
The increasing investor interest in Public.com has come shortly after traders had come together via Reddit and other social media channels to pump the share price of video-game firm GameStop, which also led to billions of dollars in losses for short sellers.
The unprecedented situation made global headlines, and Robinhood is now facing a lot of criticism and more than 30 lawsuits after it briefly restricted the trading of GameStop and various other volatile stocks.
As a major competitor, Public.com seems to have taken advantage of the Robinhood controversy. Public.com app downloads increased more than 6x on January 28, 2021, which was when Robinhood imposed trading limitations, according to App Annie data.
The new round of financing should help Public further expand its business operations.
However, investors told BI that Public.com was quite eager to acquire the cash since it was unable to make profits from “payment for order flow” (PFOF), which is the highly controversial process that Robinhood depends on to make money.
PFOF is when market makers have to pay a large brokerage such as Robinhood to share the stock or buy orders carried out by individual investors. These so-called market makers make profits by keeping the difference between what the buyer might pay for the stock and a better price, provided they are able to get one.
Public.com’s management stated that they won’t be accepting payments for order flow on February 1, 2021, after growing criticism of the controversial practice from major investors and policymakers.
In order to cover up for the lost revenue, the firm has launched a new tipping feature that clients may decide to use when conducting a trade. The company also revealed that it will be introducing a “premier” paid subscription service at some point in the future.
Public.com’s operations have grown considerably during the past year. The company is currently averaging 30% month-over-month growth. This impressive growth has likely come from a dramatic surge in stock trading, which has accelerated further due to the rise of zero-free apps, cheap brokerages, and an extremely bullish stock market.
Public.com also secured funding during several other rounds in 2020. Accel and Greycroft contributed a $15 million investment in March 2020, and Accel had led the $65 million round in December 2020.
Venture capital firms such as PLG Ventures and Cantos Ventures also acquired stakes in Public.com, along with the music duo The Chainsmokers, the NFL athlete J.J. Watt, the professional soccer player Keisuke Honda, and the professional skateboarder Tony Hawk.