Robinhood is sending confidential information for the IPO, despite the disastrous start of 2021

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IPO’s confidential presentation suggests that Robinhood plans to take advantage of the influx of retail that the startup helped start with its zero-commission business model.
Robinhood has selected the Nasdaq to list its shares, a different source familiar with the matter told CNN Business. Bloomberg News first reported the news about the confidential filing of the IPO.

A Robinhood spokesman declined to comment.

Other prominent startups, including Airbnb, Lyft, Slack, and Palantir, were confidentially presented to make them public. This roadmap allows companies to privately file a registration statement, known as an S-1, with the SEC to review it, without disclosing their financial data for now.

Finally, Robinhood will have to publish these figures so that investors can assess the company’s growth trajectory and key risks. One source told CNN Business that it will be at least a few months before the presentation of the S-1 is made public.

The GameStop saga caused a cash crisis

Robinhood started a firestorm in January, when it temporarily banned users from buying GameStop shares and other actions driven by an army of traders on Reddit. Robinhood blamed the controversial restrictions on demand for its compensation plant of up to $ 3 billion due to market volatility.

Robinhood was forced to quickly withdraw its lines of credit and quickly raise $ 3.4 billion, underscoring the apparent liquidity crisis the launch has.

The episode raised questions about Robinhood’s business model and management team and tested brand loyalty among users.

Robinhood was also sued earlier this year by the family of a 20-year-old trader who died by suicide after seeing a $ 730,000 negative balance in his trading account and mistakenly believed it was the sum of money he owed. The tragedy drew attention to the gamified nature of the Robinhood platform and the startup’s customer service deficiencies.

Hot markets

In normal times, Robinhood stumbles could destroy a stock market, raising doubts about whether the company is ready for the screening. But these are not normal times.

Minimum interest rates, combined with growing interest from retail investors and optimism about the economic recovery, have caused a boom in financial markets. US stocks are trading near record highs, valuations are high and market foam signs abound.

Investors invest money in blank check companies known as SPAC, a trend that has recently been supported by professional athletes and other celebrities. Traditional IPOs are also very hot.

Traditional IPOs listed in the U.S. have raised $ 34.9 billion so far in 2021, nearly five times what they raised over the same period last year, according to Dealogic statistics on March 19. This is the highest this year since 1995.

A major player touches the brakes on the latest Wall Street fashion

Over the past six months, major companies such as Coupang, Bumble, Snowflake, Airbnb and DoorDash have skyrocketed on their first day of trading.

According to Dealogic, the average percentage of first-day publications for IPOs listed in the United States is 44%, the highest since the dotcom bubble in 2000.

A key issue for investors examining Robinhood books will be how the explosive growth of the user was affected, if not, by the GameStop saga.

Despite the controversy, January was an almost record month of Robinhood app downloads, according to a report in late January by JMP Securities.

This is a developing story.

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