Robinhood Marches On With IPO Despite GameStop Trading Debacle

Robinhood, stocks, trading, IPO, SPAC, funding, gamestop, reddit

FinTech startup Robinhood is moving forward with a planned initial public offering (IPO) and will either pursue a direct listing or seek a special purpose acquisition company (SPAC), Bloomberg reported on Wednesday (Feb. 3) citing sources.

“The [Robinhood] IPO is full steam ahead,” one of the bankers said. Goldman Sachs is advising on the offering, according to Barron’s.

Going public will give Robinhood a new infusion of capital and allow for easier access to future financing, sources said, per Barron’s. 

Robinhood just raised $2.4 billion in a funding round led by Ribbit Capital, after raising $1 billion from current investors last week, following a trading frenzy that prompted the FinTech startup to halt trading on GameStop and other stocks. The move triggered an uproar from its customer base and Wall Street.

The company said clearinghouse-mandated deposit requirements spiked to 10 times the normal number and Robinhood “had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements.”

The debacle didn’t affect Robinhood’s allure — its app was downloaded more than a million times last week alone. 

“If they are growing users and have a plan to address the PFOF [payment for order flows] issues with Citadel, I think they can still go public with some Twitter haters out there,” a hedge fund executive told Barron’s. He predicts Robinhood’s IPO will be a winner. 

Founded in 2013 by Baiju Bhatt and Vlad Tenev, Robinhood offers no-fee digital trading in stocks, ETFs, options, and cryptocurrencies. 

Robinhood’s GameStop fiasco triggered separate lawsuits filed by two states criticizing the company’s decision to halt trading. The GameStop frenzy was boosted by Reddit users reportedly trying to disrupt the markets. 

Robinhood wasn’t alone in suspending trading. Several others also pulled trading on shares of GameStop, AMC, and others, a decision that caused a digital uproar on social media and trading forums.