Robinhood IPO Filing Public

The Robinhood IPO filing is out, and there are some great takeaways. The company became profitable last year, generating a net income of $7.45M on net revenue of $959 million in 2020, which would have been great when compared with their $107M loss on $278M revenue in 2019…. And all because the Memestock traders ruined it by YOLO’ing GME and AMC…. Bad Apes, put down that Banana!

The Robinhood IPO offering, currently set at $100 million (a number likely to change when it sets terms for the share sale) was registered on Thursday 1 July 2021, with the statement following their announcement that it had filed confidentially to go public in March of this year.

The company’s revenue rocketed during the first quarter of 2021, exceeding $522 million compared with $128 million for the same period last year, but Its losses went through the roof too, from $53 million for the three months ended March 31, 2020, to $1.44 billion in the most recent quarter. Let’s all take a moment to let that sink in.

That loss was mainly tied to convertible notes and liabilities from its emergency fundraising, when it was rushing to deal trading volatility in GME and AMC. During this time, Robinhood managed to amass more than $3 billion from investors over just a few short days.

FINRA (the Financial Industry Regulatory Authority) slapped Robinhood with an almost $70M fine this week too, a new punitive record handed out by the agency, as they alleged Robinhood misled its customers about margin trading, and failed in their oversight of technology and approvals for options traders. Robinhood did what some of these big companies do, and accepted the fine, although they neither admitted nor denied the claims. There are some reports that the company had set aside around $24M to cover these fines, and if that’s true, then getting pilloried for almost three times that amount must have stung somewhat.

Beginning on January 28, 2021, due to unprecedented market volatility and related portfolio margin demands imposed on RHS by the clearinghouse National Securities Clearing Corporation, RHS temporarily restricted or limited its customers’ purchase of certain securities, including GameStop Corp. and AMC Entertainment Holdings, Inc., on our platform (“Early 2021 Trading Restrictions”).

We have become aware of approximately 49 putative class actions and three individual actions that have been filed against RHM, RHF, and/or RHS in various federal and state courts relating to the Early 2021 Trading Restrictions. The complaints generally allege breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, breach of fiduciary duty and other common law claims. Several complaints further allege federal securities claims, federal and state antitrust claims and/or certain state consumer protection claims based on similar factual allegations.

Robinhood IPO filing, 1 June 2021

And despite the Robinhood IPO filing, even company execs admit that some of the Shenanigans which the company have been getting caught doing could have a seriously negative effect, citing how “unfavorable publicity has in the past adversely affected, and could in the future adversely affect, our reputation.”

Well, here’s a thing, how about if they don’t want to get caught doing shady things….don’t actually DO shady things eh?