The stock broker is worth $ 32 billion when it goes public – less than expected.
Stock broker Robinhood raised around $ 2.1 billion (€ 1.8 billion) when it went public in New York. The company announced Thursday night that it had sold 55 million shares for $ 38 each. Thus, the broker brings it to a valuation of nearly 32 billion dollars before the start of trading on the Nasdaq tech exchange. During the day, the shares then fell to $ 33.35 and were about twelve percent below their issue price. This means the company is still valued at around $ 28 billion, roughly as much as Deutsche Börse.
But given the high expectations before the premiere, it’s pretty poor. Robinhood had marketed its shares in a price range of up to $ 42 and was actually aiming for a total valuation of $ 35 billion. However, in an unusual move, the discount broker has reserved up to 35 percent of its newly issued shares for its own users. As a result, the beginnings are considered more unpredictable than normal IPOs: there, investment banks usually try to ensure a smooth process and stable prices.
Robinhood lists its papers under the symbol “Hood” on the Nasdaq. According to financial service Bloomberg, this is the seventh largest IPO in the United States this year. Robinhood has more than doubled its number of users in the past year. In the second quarter, it was already at 22.5 million.
Menlo Park, Calif., Founded in 2013, pioneers a younger generation of investors in the U.S. financial market with its easy-to-use app for trading stocks, options and cryptocurrencies . Robinhood, however, has a controversial business model. The broker does not take any fees from the users, but earns money by negotiating their trades. Critics accuse Robinhood of encouraging customers as a game supplier to make as many risky transactions as possible. The company defends its economic model by “democratizing” the financial market.