Omar Marques | LightRocket | Getty PicturesIn typical Robinhood vogue, the inventory buying and selling app hosted an unconventional digital roadsh
Omar Marques | LightRocket | Getty Pictures
In typical Robinhood vogue, the inventory buying and selling app hosted an unconventional digital roadshow on Saturday. Quite than holding the occasion behind doorways amongst funding bankers and hedge funds, as is typical, the occasion was democratized as Robinhood administration fielded questions from on a regular basis buyers.
Robinhood is in search of a market valuation of as a lot as $35 billion in its upcoming preliminary public providing, which is anticipated as quickly as this week. The corporate — which plans to commerce underneath ticker HOOD on the Nasdaq — is providing 55 million shares, which it should attempt to promote at a spread of $38 to $42 apiece.
Throughout the reside roadshow, Robinhood co-founders — CEO Vlad Tenev, chief artistic officer Baiju Bhatt and chief monetary officer Jason Warnick — pitched the corporate’s long-term worth and juggled questions from a pool of two,000 about retail investing, fee for order move, income diversification and extra. Tenev even took a query about his favourite planet, which is Venus.
Regardless of warning of a possible slowdown within the retail buying and selling increase, Robinhood — which expects to have 22.5 million accounts as of the second quarter — is bullish on the way forward for particular person investing.
“We expect retail investing is a development that is right here to remain. When you take a look at the info, the expansion in retail truly began years earlier than we launched. Our contribution has actually been to speed up the method,” Warnick mentioned.
Robinhood was based in 2013 by Tenev and Bhatt and provides fairness, cryptocurrency and choices buying and selling, in addition to money administration accounts. Executives mentioned greater than 80% of Robinhood’s shoppers come by phrase of mouth of the agency’s referral program. The agency mentioned it expects belongings underneath custody to balloon to greater than $100 billion as of the second quarter.
Executives fielded a number of questions on Robinhood’s supply of revenues, which is about 75% from the cash brokerage corporations obtain for guiding shoppers’ trades to market makers, or fee for order move. Warnick mentioned Robinhood receives a mean of two.5 cents for each $100 traded. Tenev additionally added that shoppers used the app a mean of seven instances per day in 2020.
“We expect fee for order move is a greater deal for our prospects, vs. the previous fee construction. It permits buyers to take a position smaller quantities with out having to fret about the price of commissions,” Warnick mentioned.
Nevertheless, Warnick mentioned Robinhood needs to be totally engaged within the regulatory and political dialogue about PFOF. He mentioned that if the PFOF mannequin modified, Robinhood and the trade would have the ability to adapt.
Within the meantime, the millennial-favored inventory buying and selling app is making efforts to diversify its income streams by adopting a securities lending enterprise, including a debit card, enhancing Robinhood Gold and increasing internationally.
Robinhood can also be trying — due to buyer demand — at including IRA and Roth IRA accounts.
“We wish to make first-time buyers into long-term buyers,” Tenev mentioned. He added that greater than 50% of Robinhood shoppers are first-time buyers.
The inventory buying and selling app can also be reserving 20% to 35% of its IPO shares for its personal shoppers, which Tenev mentioned he expects can be one of many largest retail allocations ever.
Robinhood has no plans to pay a dividend when it hits the general public markets, which administration believes is frequent for fast-growing corporations.