Robinhood Markets Inc., a fast-growing startup that designs commission-free trading app Robinhood, is looking to go public in New York as soon as the first quarter of 2021, according to Bloomberg.
The report said the company is actively seeking banking advisers and looking at different options. Robinhood did not comment on the news.
The company just closed a $660 million Series G round funding in September, for a valuation around $11.7 billion, said the company spokeswoman.
In September, D1 Capital Partners invested $200 million in the company, and soon after “we raised an additional $460 million in subsequent closings to our Series G to support our core product and customer experience and new offerings like cash management and recurring investments,” the spokeswoman added.
Robinhood, as the name suggests, is a game-changer in the traditional financial industry.
It became very popular among young people because of its famous $0 commission policy on all trading, including stock, ETF, options, and even cryptocurrencies.
The company, founded in 2013, currently has 13 million active users, according to its most recent SEC filing.
To compete for clients, nowadays many mainstream institutions are also adopting the same pricing structure. But when Robinhood first was launched, commission-free trading was by no means the norm. But while other firms like TD Ameritrade and Charles Schwab have long-offered commission-free trades, Robinhood.com's user-friendly interface combined with pandemic lockdowns has unleashed millions of new amateur traders this year.
We Can't All Be Robin Hood
To wit, in one quarter, Robinhood.com users traded 40 times as many as customers at Charles Schwab customers, according to The New York Times. While learning to trade is a good thing, the average Joe should not bet the very house in which he shelters-in-place. Fortunes have been made and lost—and so have lives.
Alex Kearns, 20, a college student in Nebraska, did himself in after he saw his account drop to negative $730,000 after a wildly speculative trade. Of course, he didn’t lose that much as the trades were incomplete and his account hadn’t shown his updated balance. Whoops.
Despite this and other controversies (In the first week of October, approximately 2,000 Robinhdoo.com accounts were accessed by hackers) the commission-free trading app is more popular than ever.
The company said without commission fees, it generates revenue from stock loan income from counterparties, income generated from cash, membership fees when users updated to Robinhood Gold, rebates from market makers and trading venues, and interchange fees from purchases made with the Cash Management debit card, and fees from program banks.