Robinhood (HOOD) Priced IPO at Lower End of Range as Some Investors Stayed on Sidelines Over Frothy Valuation

July 29, 2021 6:20 AM EDT

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Robinhood (NASDAQ: HOOD) announced it raised $2.1 billion in its initial public offering (IPO) Wednesday as the company prepares to make a public debut today.

Vlad Tenev and Baiju Bhatt, co-founders of the online trading business, each sold about $50 million worth of stock. These two together control 65.2% of the voting power of outstanding stock, with the former controlling 26.2% and the latter 39%.

The company was selling shares at $38 apiece to hit a valuation of $31.8 billion. HOOD priced shares at the low end of the $38 and $42 range as some investors cited “frothy valuation” that made them remain on the sidelines, according to Reuters.

Furthermore, the Wall Street Journal adds that the company made a “conscious decision” to be conservative with pricing in order to have better chances of closing in the green on the first day of trading.

However, industry experts have had difficulties predicting how the company will perform today given that a large chunk of shares is sold to retail investors. Robinhood previously said it will reserve between 20% and 35% of its shares for users on the platform.

The company reported 22.5 million funded accounts, up from 18 million in the first quarter. It is expecting Q2 revenue to come between $546 million and $574 million, much higher than the $244 million recorded a year ago. In Q1, revenue was at $522 million, up from $128 million a year prior.

Robinhood is expecting to report a net loss of $487 million to $537 million.

Goldman Sachs and JPMorgan Chase acted as the lead underwriters on the deal. Underwriters will have an option to buy a further 5.5 million shares.

Robinhood will debut today on the Nasdaq stock exchange under the ticker “HOOD.”



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