Robinhood, the proprietor of the buying and selling app that emerged because the go-to vacation spot for retail traders speculating on this 12 months’s ‘meme’ inventory buying and selling frenzy, raised $2.1 billion (roughly Rs. 15,600 crores) in its IPO.

The firm was looking for to capitalise on particular person traders’ fascination with cryptocurrencies and shares resembling GameStop, which have seen wild swings after turning into the topic of buying and selling hypothesis on social media websites resembling Reddit. Robinhood’s month-to-month energetic customers surged from 11.7 million on the finish of December to 21.3 million as of the tip of June.

The IPO valued Robinhood at $31.8 billion (roughly Rs. 2,36,050 crores), making it higher as a operate of its income than a lot of its conventional rivals resembling Charles Schwab, however the providing priced on the backside of the corporate’s indicated vary.

Some traders stayed on the sidelines, citing issues over the frothy valuation, the chance of regulators cracking down on Robinhood’s enterprise, and even lingering anger with the corporate’s imposition of buying and selling curbs when the meme inventory buying and selling frenzy flared up on the finish of January.

Robinhood stated it bought 55 million shares within the IPO at $38 (roughly Rs. 2,820) apiece, the low finish of its $38 (roughly Rs. 2,820) to $42 (roughly Rs. 3,110) value vary. This makes it some of the beneficial US corporations to have gone public year-to-date, amid a red-hot marketplace for new listings.

In an uncommon transfer, Robinhood had stated it could reserve between 20 p.c and 35 p.c of its shares for its customers.

Robinhood’s platform permits customers to make limitless commission-free trades in shares, exchange-traded funds, choices and cryptocurrencies. Its easy interface made it standard with younger traders buying and selling from house in the course of the COVID-19 pandemic.

Robinhood enraged some traders and US lawmakers earlier this 12 months when it restricted buying and selling in some standard shares following a 10-fold rise in deposit necessities at its clearinghouse. It has been on the middle of many regulatory probes.

The firm disclosed this week that it has acquired inquiries from US regulators trying into whether or not its workers traded shares of GameStop and AMC Entertainment earlier than the buying and selling curbs have been positioned on the finish of January.

In June, Robinhood agreed to pay practically $70 million (roughly Rs. 520 crores) to settle an investigation by Wall Street’s personal regulator, the Financial Industry Regulatory Authority, for “systemic” failures, together with techniques outages, offering “false or misleading” data, and weak choices buying and selling controls.

The brokerage has additionally been criticized for counting on “payment for order flow” for many of its income, underneath which it receives charges from market makers for routing trades to them and doesn’t cost customers for particular person trades.

Critics argue the observe, which is utilized by many different brokers, creates a battle of curiosity, on the grounds that it incentivises brokers to ship orders to whoever pays the upper charges. Robinhood contends that it routes trades based mostly on what’s least expensive for its customers, and that charging a fee can be dearer. The US Securities and Exchange Commission is inspecting the observe.

Robinhood was based in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. They will maintain a majority of the voting energy after the providing, these filings confirmed, with Bhatt having round 39 p.c of the voting energy of excellent inventory whereas Tenev will maintain about 26.2 p.c.

The firm’s shares are scheduled to begin buying and selling on Nasdaq on Thursday underneath the ticker “HOOD”

Goldman Sachs and J.P. Morgan have been the lead underwriters in Robinhood’s IPO.

© Thomson Reuters 2021