Controversial online brokerage Robinhood has filed paperwork to pursue an initial public offering (IPO).
Robinhood has confirmed its upcoming IPO in a blog post. The company’s move to go public comes after a rollercoaster year for the company. The pandemic helped draw new retail investors to its stock trading app, and, during a Reddit-fueled trading frenzy in January, the company added three million new users.
However, Robinhood has been criticized for treating investing more like gambling and for attracting inexperienced investors who have lost their savings on risky trades. After the January short squeeze of GameStop (NYSE:GME), Robinhood Chief Executive Vlad Tenev was hauled before lawmakers in Congress to testify on the trading frenzy and whether new regulations are needed.
Robinhood has chosen the NASDAQ exchange for its IPO and hired Goldman Sachs to lead its market debut.
Robinhood was founded in 2013 by Tenev and Baiju Bhatt, who were roommates at Stanford University. They started in finance selling trading software to hedge funds, before creating Robinhood to develop ways for everyday retail investors to buy and sell stocks without paying commissions.
Robinhood gained popularity among younger investors by making stock purchases as easy as finding an online date on Tinder. Customers quickly link their bank account information, search for a stock, and swipe up to purchase shares.
Robinhood is one of several platforms that allows customers to buy fractional shares. Instead of buying a single Tesla (NASDAQ:TSLA) share for over $660, a customer could opt to invest $5, $10 or $100 and get a piece of one single share.
One of its most significant moves came in early 2018, when Robinhood opened the door to cryptocurrencies. Users can purchase Bitcoin, Ethereum and other digital currencies on the app the same way they buy stocks.
Robinhood had been valued at about $12 billion in a 2020 financing round. To avoid a liquidity crunch, the company raised $1 billion in February of this year. New York-based D1 Partners, Sequoia, Kleiner Perkins and Google-parent Alphabet (NASDAQ:GOOGL) were among the biggest venture capital investors in Robinhood.
