Robinhood files to go public after a record-breaking fine

American stock trading & investing company Robinhood has filed to go public in a controversial IPO a day after being fined $70 million over misleading users. 

As reported by Bloomberg, the company filed confidentially for an IPO in March and sources familiar with the matter recently said that it’s aiming for a July IPO at a $40 billion valuation. The rumors came out to be true after the company released an S-1 filing yesterday. It plans to list on the Nasdaq exchange under the ticker ”HOOD”.

According to the filing, Robinhood app surpassed 18 million users in March which more than doubled from the previous year. It’s first quarter revenue quadrupled to $522 million, the average number of daily cryptocurrency trades on the platform increased by 14 times, and the total value on Robinhood accounts grew from $481 million to $11.6 billion in Q1 2021. 

Also Read: Robinhood Revenue and Usage Statistics (2021)

This immense growth was largely driven by the GameStop mania which started with a Reddit post in January this year and led millions of people around the world to step into the world of trading and invest in cryptocurrencies and stocks.

Also Read: Netflix reportedly planning to produce a film on GameStop stock surge

“For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020,” the company wrote.

The company also said that DOGE accounted for 34% of Robinhood’s crypto transaction revenue in the first quarter.  

“If demand for transactions in dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected,” Robinhood said.

The meme stock mania also led the company to face over 50 lawsuits after it’s decision to restrict trading in GameStop. To settle regulators’ allegations, the company has paid $136 million so far. 

Also Read: The 5 Best Investment Apps for Beginners

Robinhood’s business model, especially payment-for-order-flow (PFOF), could require important changes for the company, according to Reuters

‘’New regulation in these areas could require “significant changes to our business model,” the company said. ‘’Because its competitors are not as reliant on PFOF, heightened regulation of the practice “could have an outsize impact on our results,“.