Robinhood made no-fee stock trading its selling point landing a market capitalization of $32 billion. Robinhood has offered 20%-35% of its IPO shares to its own clients that trade on the platform, which are are mostly millennial users. Robinhood has $81 billion in assets under custody.
The Robinhood valuations is much larger than Interactive Brokers (IBKR). It is not as high as Charles Schwab (SCHW) or Morgan Stanley (MS). Charles Schwab purchased TD Ameritrade in 2020, and Morgan Stanley acquired E-Trade Financial.
The clients of Robinhood are more into short term trading than long term buy and hold investing. Companies such as Raymond James, Fidelity, Schwab, and the like. As younger clients mature they look for more direction and advice for managing their financing. Charles Schwab and other large brokerages in its category took fees for online stock trades to zero.
Robin Hood began trading at below IPO price. The stock was offered at $38 a share, raising $2.1 billion, trading under the symbol HOOD. Didi Global (DIDI) raised $4.4 billion in June with its IPO.
Roger McNamee said today with his interview on CNBC, Robinhood will be forced to abide by regulatory issues and not having overcharges. He is worried over the risk overall for investors. He said you must look at your time horizon and if it could be a long-term fit, but the bet is 2 to 3 times the market. He does not see that the markets are going to be that great and could imagine a better price for the stock. Roger said he cannot see the data at this point that makes sense to make the investment. He says being a market mover is difficult. Even Google has a rough start with its IPO. Can they sustain the order flow to allow people to trade for free? He believes additional products could be added with the capital they have to help them move along in the future.
Robinhoods IPO Filing Statement: We have seen an enthusiastic response from customers and are humbled by how often they share Robinhood with their families, friends, and colleagues. This powerful word-of-mouth referral network has helped to rapidly grow our customer base. In 2020, our Net Cumulative Funded Accounts grew 143% to 12.5 million, increasing to 18.0 million as of March 31, 2021, with over 80% of new Funded Accounts in 2020 and in the three months ended March 31, 2021, joining our platform organically or through the Robinhood Referral Program. For the monthly cohorts in the year ended December 31, 2019, our average revenue payback period was 13 months, and for the monthly cohorts in the year ended December 31, 2020, our average revenue payback period improved to less than five months. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Performance Metrics” for definitions of “Funded Accounts” and “revenue payback period.” For a definition of “organically” acquired customers and a definition and description of the “Robinhood Referral Program,” see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Business Model—New Customer Growth.”
For the year ended December 31, 2020, as compared to the year ended December 31, 2019:
- Our total revenue grew 245% to $959 million, up from $278 million.
- We recorded net income of $7 million, compared to a net loss of $107 million; and
- Our Adjusted EBITDA was $155 million, compared to negative $74 million.
In addition, for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020:
- Our total revenue grew 309% to $522 million, up from $128 million.
- We recorded net loss of $1.4 billion, which included a $1.5 billion fair value adjustment to our convertible notes and warrant liability, compared to a net loss of $53 million: and our Adjusted EBITDA was $115 million, compared to negative $47 million.
Adjusted EBITDA is a non-GAAP financial measure. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for more information about Adjusted EBITDA, including the definition and limitations of such measure, and a reconciliation of net income (loss) to Adjusted EBITDA.
Future Vision. Our vision is for Robinhood to become the most trusted, lowest-cost, and most culturally relevant money app worldwide. We innovate at the epicenter of finance, technology, and access for all. As we look to the future, we want to help Robinhood customers manage all aspects of their financial lives in one place. We envision them moving seamlessly between investing, saving, and spending all on the Robinhood platform. When we check our email, there is a go-to app. When we need a map, there is a go-to app. We envision a world in which Robinhood is that go-to app for money. We believe people want to build financial independence and have the tools and ability to own their financial well-being. We look forward to being our customers’ single money app that enables them to achieve those goals.
Bloomberg reported, “Robinhood is working on a feature to allow its customers to invest spare change. The feature is called “round up investments” that will allow users to invest their spare change in specific stocks This feature would compete directly with spare-change app Acorns, which is also going public this year.” Source Bloomberg