Robinhood’s IPO – The Long Awaited Launch
Robinhood is a mobile trading app with a massive following in the US. As its name suggests, its mission is to make Wall Street available to everyone not just the wealthy.
The company has made global headlines in 2021, mainly around the Gamestop short squeeze, and is a driving factor of the growing influence social media is having recently on financial markets.
The IPO has been long awaited and finally happened on July 29th, when Robinhood launched on NASDAQ under ticker symbol HOOD.
What do investors think?
A lot of retail investors are watching this IPO closely, and perhaps unsurprisingly opinions vary on how it will perform. Robinhood has achieved substantial growth, with over 22 million active clients currently on their platform, however on the other hand there remains doubts as to how the future looks for Robinhood due to ongoing regulatory investigations coming from the SEC and FINRA.
Peter Cohan, a Forbes contributor, perhaps best sums up critics. He provided his reasons to avoid buying Robinhood at IPO:
- Risk of regulatory crackdown on its revenue sources
- Big fines imposed after its dodgy treatment of users
- Uncertain sources of revenue growth
What did Robinhood have to say
Understandably, Robinhood are trying to install confidence in potential investors. Robinhood's CFO, Jason Warnick, recently pointed out in an interview:
"IPO access is a feature that has been limited to traditionally more wealthy individuals and institutions. And so we're really excited to be providing one of the largest retail allocations in IPO history".
"in terms of the way that we're thinking about the future, we-- we're looking at building products for our customers and over the long term continuing on our mission so that more and more people across the world have access to the financial system. For so long, they've been left out and really not feeling welcome to participate. And by eliminating trading commissions and being mobile-first and having no minimum account balances, we're just seeing really tremendous participation, millions and millions of customers"
CEO Vlad Tenev explained for CNBC: "….my philosophy, the philosophy of Robinhood is to make it as easy as possible to participate. And on the brokerage side, the goal is really how do you take first time investors and turn them into long term investors. And you've seen that through a lot of the products that we've rolled out recently – fractional shares, drip, recurring investments….."
Robinhood was eagerly anticipated even before its 2015 launch. 340,000 people had already signed up to the app's waitlist in 2014 and by March 2015, a month before the launch, that figure had more than doubled. Investors and retail traders from Europe, Australia and South America filled Robinhood's forums, pleading for the app to launch in their country and today, more than 5 years on, Robinhood is a household name.
With varying opinions surrounding its launch, the company remains constantly in the news and is likely going to be a favourite for traders of the US market and definitely one to watch.
Kalin Tsenov has a strong research background in economics with specific interests in Geopolitics and its impact on the Financial Markets.
He joined FXCM in 2018 after obtaining a Bachelor's Degree from Leeds Metropolitan University. Initially starting as a Business Analyst in the Payment Solutions department, he is currently a Product Specialist in the Firms Product & Strategy department.
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