- Robinhood is moving ahead with its planned IPO this year, according to a Bloomberg report.
- Robinhood has seen intense fury from its customers after the firm restricted trading in a handful of volatile stocks like GameStop.
- Robinhood could sidestep a traditional IPO in favor of a SPAC merger, according to the report.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Robinhood’s controversial decision to limit trading in a handful of volatile stocks isn’t derailing its plans to go public later this year, according to a report from Bloomberg, citing people close to the company.
Robinhood has seen a surge in business over the past year as a new generation of investors flocked to the stock market amid a global pandemic that shut down professional sports leagues for months on end.
The company had more than 13 million users at the end of 2020.
The firm, founded in 2013, is keeping its options open in terms of how it goes public. According to the report, Robinhood is exploring a traditional road show IPO, a direct listing, or a merger with a SPAC.
The company had been planning to hold an IPO around May, Bloomberg said.
But over the past week, the firm has received a cash infusion of more than $3 billion as it grappled with meeting deposit requirements amid an epic short-squeeze rally in shares of GameStop and AMC.
The short-squeeze was sparked by traders who frequent Reddit’s WallStreetBets, and many of Robinhood’s users took part in the squeeze by buying shares of the impacted stocks. Robinhood ultimately restricted buying in shares of GameStop and others so it could meet its deposit requirements, the company said.
The move angered its customers, its employees, and politicians on both sides of the aisle, as the GameStop short-squeeze has been viewed as a David vs. Goliath moment in which everyday retail investors took down Wall Street hedge funds.
Melvin Capital and Maplelane Capital, two hedge funds that were short shares of GameStop, suffered losses of 53% and 47% in the month of January, respectively.
Robinhood was valued at about $11 billion in a 2020 fundraising round, but the IPO valuation would likely be higher based on last week’s capital raise.
Ribbit Capital led the latest capital raise with a $2.4 billion convertible note that will convert into equity at a $30 billion valuation, or a 30% discount to an eventual valuation in a public listing, whichever is lower, Bloomberg reported, citing people with knowledge of the terms.
Going public will give Robinhood flexibility in terms of securing future financing that could be used to increase its cash buffer needed to appease regulators, as well as fund growth initiatives.