US-based trading platform Robinhood has announced that it plans to raise $100 million with its initial public offering (IPO). The company has chosen to list its shares on the Nasdaq stock exchange with the symbol HOOD.
The specific number of shares available, and therefore the price of each share, is yet to be announced. It is also unknown when these shares will become publicly available.
Robinhood reserving shares for existing customers
An IPO essentially means a private company becomes a publicly traded one.
Company shares are sold to the public and then can be bought and sold on public stock exchanges, such as the Nasdaq or the London Stock Exchange.
As part of the IPO, Robinhood is looking at reserving a portion of their shares for existing customers of their service. The current expected range is between 20% and 35%, as part of the company’s commitment to giving retail investors better access to IPO shares. The IPO will be available on Robinhood’s own “IPO Access” platform.
Bear in mind that an IPO comes with risks. As with other IPOs, you can request shares early, but that doesn’t guarantee that you’ll receive the number you want. As with any stock, there is also no guarantee that the price will rise.
Certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York, told CNBC: “There’s the potential for a lot of volatility with an IPO as the market sorts out what the real value of the company is.”
Robinhood, initially launched in 2013, is currently unavailable in the UK, though it has helped revolutionise the investing landscape through its availability to a wider audience. Other UK trading platforms offer a similar zero commission trading base, such as eToro and Freetrade, both of which we have previously reviewed.
Robinhood and the Merry Redditors
The userbase on Robinhood continues to grow, with about 31 million users in 2021. This more than doubles their userbase in 2020, which generated an annual revenue of $959 million last year.
Though Robinhood’s international expansion plans have been put on hold, as the platform apologises in an article on their website, they ensure that they are still committed to “opening access to financial markets for more people around the world.”
Robinhood has enjoyed great success despite setbacks earlier this year. The trading platform found itself in hot water after a series of events surrounding the stock price of American video game retailer GameStop.
When thousands of users from r/WallStreetBets on Reddit banded together to invest in GameStop, Robinhood restricted trades on volatile stocks for retail investors. This surge in stock price ended up costing billions of dollars for multiple hedge funds, who were betting against GameStop stock.
You can read more about the GameStop saga here in a simplified, easy-to-read way.
Antonia is the Financial Editor at InvestingReviews.co.uk and brings a wealth of experience, having written for various industries over the past 10 years.
Her investment platform reviews, news, blogs and guides are meticulously researched, fact checked, and updated on a regular basis.