Robinhood looking at $20B Q1-2021 IPO led by Goldman
Online trading upstart Robinhood has taken another step in preparation for a planned early 2021 IPO. Reuters is reporting that Goldman Sachs has been selected to lead the Robinhood IPO, after the company held a brief “beauty contest” among leading US and international investment banks.
The company has also apparently contemplated going public via the merger-with-a-SPAC route, a method recently selected by payment platform company Paysafe, but will look go the more traditional route itself. SPACs are “blank check” shell companies which go public with the stated purpose of using the cash raised to acquire an existing private business, thus taking the private company public. The allure of a SPAC for a company like Robinhood is the near-certainty of getting a deal done, on preset terms, while IPOs are a more unpredictable process.
The target valuation for the IPO will be $20 billion, but of course a lot can still happen between now and when the IPO gets to market next year. Robinhood has raised more than $2 billion in a series of fundraisings, with the last being done this past summer at a valuation north of $11 billion. The company has a quite interesting mix of investors, from VC firms such as Sequoia, D1 Capital and Andreessen Horowitz to celebrities including rapper Snoop Dogg and actor Jared Leto.
Shares of Robinhood are already available for grey market trading (i.e. betting on the actual IPO price) at some firms including IG Group.
Robinhood shook up the relatively staid and oligopolistic world of online share trading in the US (dominated by Schwab, Fidelity, TD Ameritrade, and E*Trade) by introducing commission-free trading and focusing on younger traders and a more mobile-focused product. Its growth hasn’t come without some speed bumps, including a failed international expansion attempt in the UK, and bad publicity surrounding the suicide of a 20-year-old Robinhood trader in June after seeing a negative balance of over $730,000 in his Robinhood account, which led the company to look at providing more education and limits for its clients.