Initial public offering news kicked off this week with a filing from Airbnb. However, the market for upcoming IPOs looks even hotter after headlines broke yesterday about Robinhood. Is the trading platform really coming public? And if so, what do you need to know about the Robinhood IPO?
To start, investors should know that there is no official confirmation of the Robinhood IPO. However, as Bloomberg wrote yesterday, the company is seeking advisors for a potential 2021 filing. This checks out, as there has long been speculation that the fintech leader would hit the public markets.
With this in mind, here are 13 things for investors to know about the potential Robinhood IPO.
- If you are unfamiliar with Robinhood, it is a stock-trading app popular with newer investors.
- The platform has particularly become popular during the novel coronavirus pandemic. Why?
- This rise in popularity is likely thanks to the stay-at-home entertainment trends, and direct $1,200 payments to Americans also boosted investing.
- Importantly, this backdrop has many investors excited about a potential Robinhood IPO.
- Bloomberg says the company could be coming public as soon as the first quarter of 2021.
- As of right now, it has a valuation of about $11.7 billion.
- Its last funding round saw it bring in $460 million in September.
- Additionally, updates from May show that it has about 13 million users.
- As I mentioned above, this figure could be higher now thanks to the coronavirus.
- One of the reasons there is so much excitement about Robinhood is that it’s an industry disruptor.
- How? Robinhood is one of the pioneers of accessible, commission-free trading.
- Because of its pressure on the brokerage industry, companies like Charles Schwab (NYSE:SCHW) had to remove their trading fees.
- Another perk of Robinhood is that it allows investors to buy and sell cryptocurrencies as well as fractional shares.
The Robinhood IPO and the Coronavirus Catalyst
Clearly, there is a lot to like about the app. For investors, it is an easy way to dive into the world of buying and selling stocks, making investing more accessible than ever before. Importantly, this made Robinhood particularly popular during the coronavirus as more Americans were interested in investing. Just think about the mantra of buying the dip and what that meant during the pandemic!
However, as you eye the potential Robinhood IPO, you should also understand just what this platform has done to the market. As several electric vehicle executives shared earlier this week, they credit the popularity of the market debuts to Robinhood. Without it, their mergers with special purpose acquisition companies may not have had any — or at least far less — retail interest. Instead, investors have chased up SPAC stocks ahead of their reverse mergers.
No, Robinhood has not been perfect, and it is not alone as a fintech disruptor. One of the biggest complaints against the platform is that it comes with dangers. What do I mean? Earlier this year, a young investor died by suicide after an options trading misunderstanding. Many more-established investors saw this as a sign that increased accessibility is not always a good thing.
The company has committed to making changes to its educational offerings, and it still has time to strengthen its platform before an IPO. So what is the bottom line? If a Robinhood IPO happens, it will generate a ton of excitement. That means you should put it on your radar now.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.