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The digital transformation fair

The Robinhood brokerage application, darling of American stock marketers, is wooing its users by offering them to also be shareholders during its long-awaited IPO on Thursday, which values ​​the troublemaker of finance at around $ 32 billion.

Robinhood Markets Inc, developer of the brokerage app on behalf of “Robin Hood,” popularized the idea of ​​easily buying or selling stocks without any commission. It will take its first steps on the Nasdaq under the acronym “HOOD”.

Some 55 million shares are being offered by the company and its executives at a price of $ 38 per unit, enabling them to raise $ 2.1 billion.

From 20% to 35% of the new shares are reserved for the subscription of users of the application.

Once the fees are removed, the operation should bring in $ 1.89 billion in new money for the platform, which wants to develop particularly in the field of cryptocurrencies.

At the end of March 2021, Robinhood, whose popularity has grown steadily since the start of the pandemic, had 18 million users against 7.2 million a year earlier.

They held a total of $ 80 billion in assets, an amount that has quadrupled in one year.

The group managed to generate a net profit of 7.4 million dollars in 2020, against a loss of 106.6 million the year before.

At the heart of the pandemic, for several quarters, its application was among the most downloaded on Apple’s application store, the App Store, the group still boasts.

Based in Menlo Park (California), the company was founded in 2013 by Vladimir Tenev and Baiju Bhatt, former designers of high-frequency trading platforms. Its credo: “democratize finance for all!”

“We were the pioneers in trading stocks with no commission and no minimum account. The rest of the industry has followed suit, ”say documents submitted to the US securities authority, the SEC, for its listing on Wall Street.

But the platform has also found itself in the crosshairs of US lawmakers and regulators. He has been criticized for participating in the volatility of Wall Street during the infatuation of stock marketers for flashy stocks, like the video game chain GameStop.

Supported by an army of stock market followers of social networks and ganged against hedge funds that bet on the stock to the decline, the title GameStop had soared at the beginning of the year on Wall Street.

This wave of speculation, which is not completely extinguished, had also led to the peaks of the titles of groups in the future yet seen as uncertain, such as AMC cinemas or the manufacturer of BlackBerry phones.

Lawmakers have also criticized Robinhood for making stock transactions too playful on its application, potentially leading to uninformed decisions.

In June, the group was fined nearly $ 70 million for harming customers.

The SEC, for its part, questions the merits of the online broker’s operating methods.

Because the broker finances the absence of commissions by subcontracting his large volumes of orders to intermediary market makers who pay him for it. A legal practice, but opaque.

“Not all brokers do this in the United States. It is banned in the United Kingdom, Canada and Australia and it does not exist in most of Europe ”, recently underlined the new president of the SEC, Garry Gensler, who is looking into this matter.

In its notice of presentation to future shareholders, Robinhood acknowledges that its business is subject to “complex and changing laws” and “regulatory investigations”. “Changes in these laws (…) could harm (our) business,” he admits.

“Robinhood has chosen the perfect time to go public,” said William Smith, chairman of the specialist firm Renaissance Capital, recently in a note, pointing to the boom in retail and cryptocurrency trading.

“Up to 35% of the shares offered at the IPO are intended for users (of the application), so the business had better go well or else Robinhood may have to change its name”, a- he quipped.

MARKET REVIEW. Wall Street was digesting the messages from the US central bank the day before.

The Wall Street Journal has claimed that Didi will quit Wall Street to appease the Chinese government.

MARKET REVIEW. Wall Street was digesting the messages from the US central bank the day before.

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