Robinhood files S-1 for IPO

The crypto-friendly platform Robinhood filed with the U.S. Securities and Exchange Commission (SEC) filing for an initial public offering on Form S-1.

A class A ordinary share listing on Nasdaq under the ticker ‘HOOD’ is planned. The number and price range of the shares to be offered have not yet been determined. Underwriters will be Goldman Sachs and JPMorgan.

Between 20% and 35% of the offering shares will be reserved for purchase by customers through the platform’s corresponding feature.

According to the document, in the first quarter of 2021 the firm posted revenue of $522m (+245% year-on-year), net loss of $1.4bn. This was affected by a $1.5bn negative revaluation of the fair value of convertible notes and warrants, the consequences of the GameStop stock frenzy.

Seventeen percent of total revenue came from crypto transactions (for the period October–December 2020 — 4%). A third of this amount came from clients’ Dogecoin trading (4%).

“If trading activity or the price of Dogecoin falls, this could affect our financial results,” the filing states.

The platform offers trading in seven digital assets — Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic and Litecoin. During the latest reporting period, 9.5 million users executed trades totaling $88bn.

In Q1 2021, client crypto assets on the balance sheet rose from $3.5bn to $11.6bn. Robinhood flagged reputational and financial-loss risks in the event of inadequate custody and governance of client cryptocurrencies.

“If we are unable to access our private keys or suffer a hack or other data loss, … this could damage our reputation and business,” the filing notes.

The S-1 form also contains information about a previously undisclosed investigation by the California Attorney General into the firm. In addition, there is information about a settlement in principle of claims by NYDFS.

Earlier ForkLog reported that the listing planned for June was postponed as the SEC studied the platform’s cryptocurrency business.

On 1 June, it emerged that Robinhood would pay a record $70m penalty to settle a dispute with FINRA. In March the firm estimated these costs at $26.6m.

In March, Robinhood’s CEO Vlad Tenev announced the addition of a cryptocurrency wallet to the service. The company’s Chief Operating Officer Christine Brown subsequently said that since January the development team had grown fivefold.

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