By warning of a deterioration in its short-term results, Robinhood aims to gain a high position in the stock market.

(BFM Bourse) – The free brokerage application, which has exploded in popularity following the health crisis, filed a filing with the SEC on Monday. Robinhood intends to raise up to $ 2.3 billion and reserve 20 to 35% of the titles offered in this operation for its users.

We know more about one of Wall Street’s most highly anticipated IPOs of the year. In a document filed with the SEC on Monday, Robinhood says it is aiming for an estimate of up to $ 35 billion. The brokerage app will offer about 55 million shares for subscription at a price ranging from $ 38 to $ 42 per share. If the market capitalization that an online broker may have is significant (33 billion in the middle of the range), it is nonetheless below the $ 40 billion mentioned by its founder Vladimir Tenev last June. However, that’s three times the $ 11.2 billion estimate at the end of the last round of the table in August 2020.

The feature of the work: The super popular brokerage application plans to reserve 20 to 35% of the shares offered to its own users, which is much more than the share traditionally allocated by companies to individual shareholders (usually less than 10%). Because the company, founded in 2013 with a mission of “democratizing finance for everyone,” also intends to allow private investors to participate more regularly in IPOs.

Robinhood points out in its filing that software publisher Salesforce, through its venture capital division, has pledged to wager up to $ 150 million in shares that will be listed under the ticker “HOOD”.

On the financial side, the filing shows that Robinhood’s growth continued in the second quarter thanks to an influx of new users and an increase in options and cryptocurrency trading. The group also plans to record revenues in the second quarter from 546 to 574 million dollars, which is more than double the year before (244 million).

After he managed to generate net income of almost 60 million euros in the second quarter of 2020, he nevertheless expects his accounts to fall significantly in negative territory, with expected losses of between 487 and 537 million dollars over the period. .April-June 2021. And Robinhood warns that its Q3 2021 revenue will be lower than Q2 as the online broker has seen less activity, especially in cryptocurrency trading. This, coupled with a sharp increase in operating costs and, above all, a change in the fair value of convertible bonds in the implementation (by 528 million in the middle of the range), justifies the large quarterly losses that will arise in the future. Group.

The number of accounts opened and effectively funded by its clients (“savings accounts”), for its part, jumped 4.5 million in the second quarter to 22.5 million at the end of June, up from 9.8 million a year earlier. Assets held by Robinhood (“assets in custody”), for their part, surpassed the 100 billion threshold at the end of the second quarter of 2021 (up to 102 billion), when they were “only” 33 billion in the same period last year.

The application was popular even before the pandemic, but during the blocking it was actively used mainly due to the “millennials” who had the time and money to speculate. He also took advantage of the speculative frenzy surrounding stocks such as the video game chain GameStop or AMC Theaters, especially sparked by individual investors earlier in the year. In addition to the madness that gripped dogecoin, this cryptocurrency was created as a joke that Elon Musk regularly promotes, and whose trading accounted for 37% of Robinhood’s cryptocurrency income in the first quarter of 2021.

Finally, among the risk factors that investors should take into account before investing in an IPO (two full pages), Robinhood names, among others, “a lot of pending litigation,” possible “cyberattacks,” and “its dependence on third parties. perform certain operations. ” Recall that the group receives a significant part of its income from resale to funds that play the role of market makers (“market makers”) – from the possibility of fulfilling orders transferred by its clients, which is a rather controversial practice. …

Quentin Subrann – © 2021 BFM Bourse

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