Robinhood’s IPO is expected in July 2021. The company has filed for an IPO with the SEC, and details about the business have emerged. About half of Robinhood users are first-time investors.
Robinhood, one of the most popular brokerage houses among US retail traders, has filed for an Initial Public Offering (IPO) with the Security and Exchange Commission (SEC). The filling offers potential investors an insight into the Robinhood business, known for affecting market prices and volatility in 2020 and 2021 alike.
The COVID-19 pandemic brought an unexpected rise in the number of retail traders interested in investing. Robinhood aimed at democratising US finance and was one of the few companies that introduced fractional share investing. Investors were offered the possibility to buy only a fraction of a share, making expensive shares suddenly available to the retail trader.
Behind this IPO, we can find some interesting statistics explaining the frenzy surrounding the US retail market and the power behind the retail community.
Robinhood Targets $40 Billion IPO Valuation
Before an IPO, any company planning to sell shares to US investors must file with the SEC. The filling process requires disclosures about the business and customers, revealing some interesting facts about US investors.
For example, 2020 was a stunning year for Robinhood – it tripled its revenues when compared to 2019, reaching close to $1 billion. The cumulative net deposits grew exponentially in 2020 by annual cohort, suggesting active market participants.
Moreover, the median Robinhood user is only thirty-one years old. Furthermore, the average account size is $5,000 as of February this year. The number of monthly active users exceeded 11 million in December 2020, and new customers are attracted organically via traditional channels such as online marketing or referral programs.
2020 saw the rise of the meme stocks. Companies such as GameStop or AMC have seen a sudden interest from the retail community organised on social networks such as Reddit. By using derivatives such as options and fractional share investing and by acting in unison on platforms such as Robinhood, the retail community was responsible for the short-squeezes that followed.
Filling for an IPO is the next logical step for an American company that plans on growing its business. The process requires transparency as the business opens up to new investors – and so the investing community can find out more about the new wave of retail traders.