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Robinhood has priced its shares at $ 38 apiece, the low point of its target price, reflecting investor demand for the long-awaited initial public offering of the popular trading program.
The company, which aimed to sell 55 million shares, set a range between $ 38- $ 42 per share. While the hottest tech stock market goers often cost above expectations, Robinhood’s value indicates that the investor loop was not insatiable for the stockbroker.
The final offer price of $ 38, which was announced late on Wednesday, gives Robinhood a valuation of $ 31.7 billion. Private investors previously rated It amounted to more than $ 11 billion in August. Shares are expected to start trading on the Nasdaq stock market on Thursday.
The California-based Robinhood has a place of choice for many investors for the first time, offers commission-free transactions that have encouraged it with rewards, bonuses and push notifications. With an average age of 31, its clients are often younger and have a smaller account balance than that of established online brokers such as Schwab, Fidelity and ETrade.
It recorded explosive growth, doubling the number of accounts on its platform to 31 million since the beginning of the year.
However, Robinhood has also come under fire from regulators for the game-like features in its app, limited customer service and reliance on a controversial practice of selling transactions called order flow payments. In June, the Financial Industries Regulatory Authority imposed a $ 70 million fine on Robinhood for inflicting ‘widespread and significant damage’ on customers. It was the biggest fine the government has ever imposed.
The offer allotted up to 35 percent of the shares to his own customers. Modest appetite for Robinhood’s stock market move suggests that investors were not immune to the recent high-profile investigation, as well as concerns about how the brokerage would maintain its high trading volumes in a post-pandemic world where people had time for other activities.
Robinhood’s offer paves the way for a windfall for its executives and investors. At the IPO price, the co-founders of Robinhood, Baiju Bhatt and Vlad Tenev, would own $ 3 billion and $ 2 billion respectively.
Index Ventures, the largest outside investor, has a $ 3.2 billion stake.
The extraordinary growth of Robinhood periodically led to technical disruptions during periods of increased volume, and during a meteoric rise in the shares of the meme share GameStop in January, the platform had to suspend trading and raise billions to meet market capitalists’ requirements. .
Investors who have provided the $ 3.5 billion emergency financing can receive shares at a 30% discount to the offer price as their debt converts into shares.
Bhatt and Tenev will retain majority control of Robinhood through a two-tier share structure, meaning they will have a minimum of 65 percent of the voting rights despite owning less than 20 percent of the company’s shares .
This high voter turnout is cited by institutional investors as a source of concern over participation, despite Robinhood’s strong recent performance.