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Robinhood Plans to go Public as it Files Form S-1 with SEC

Robinhood Plans to go Public as it Files Form S-1 with SEC

Robinhood just indicated its plans to go public by confidentially filing its paperwork with the U.S. SEC. On Tuesday, the company confirmed that it had discreetly presented a draft registration statement on Form S-1 with the SEC. It is relating to the common stock’s proposed public offering. Form S-1 asks companies to offer more specific data on the planned use of capital proceeds and a brief prospectus on the proposed security.

Nevertheless, Robinhood did not disclose how many shares it intends to sell or what price it requires to offer them when it expects to go through the offering. Nevertheless, the form will come into effect only after the SEC concludes its review process. In case the regulator refuses to sign off on an arrangement in which new shares are generated, underwritten, and sold to the public then Robinhood could attempt a direct listing in which it does not require creating new shares. Thus, it only has to trade existing shares with zero involvement of underwriters. 

Robinhood gains 6 Million New Users in 2021

Rumors regarding a Robinhood IPO have been doing rounds for months amidst news. The company had marked a team of advisors to assist it via the listing process. In October 2020, Vlad Tenev, the CEO and Co-founder of Robinhood, advocated that he was not in a hurry to push a public listing as the company had adequate funds. Furthermore, the fintech’s increasing valuation wasn’t affected even after Robinhood bothered many of its users when it tentatively suspended GameStop trading. This circumstance, nevertheless, pushed the company to raise $1 billion in emergency funds from investors. It is on top of $500 million the broker obtained via credit lines, to meet clearinghouse deposit conditions. 

Robinhood also faces regulatory investigations on various fronts. It involves alleged failures to defend amateur investors while aggressively selling its products to them. Additionally, the no-fee app malfunctioned several times in 2021. However the trading outages did not appear to have frightened retail traders away from the commission-free broker. All these incidents have barely hurted Robinhood’s reputation. Robinhood added 6M new cryptocurrency users in January and February 2021, which was 15 times greater than the average figure of 2020.

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