According to a revised document filed by the US Securities and Exchange Commission on Monday, Robinhood’s stock trading application’s initial public offering target value is as high as 35 billion U.S. dollars, which means that its two co-founders are preparing to add billions of dollars to their wealth.
The highly anticipated IPO will make Robinhood’s billionaire co-founder Vlad Tenev and 36-year-old Baiju Bhatt richer.
According to the latest introduction, Tenev owns 54.3 million Class B shares, while Bhatt owns 80.2 million shares. As part of the transaction, the two co-founders plan to sell approximately 1.25 million Class A shares. Forbes estimates that at $40 per share (the midpoint of the proposed offering range), Tenev’s shares in Robinhood are worth approximately $2.2 billion, and Bhatt is worth $3.2 billion. The mobile-friendly discount broker
, the first to launch commission-free stock trading, plans to raise as much as $ 2.3 billion in its next public market debut, possibly next week. According to the latest prospectus, the company plans to sell a total of 55 million shares at a price of $ 38 to $ 42 per share, under the trading code “HOOD.
Taking into account various incentives and restricted share units, after the IPO, Tenev and Bhatt will each own 7.9% of the company’s shares and will own all of the Class B shares. According to the documents, there are 10 votes per share. In total, Tenev will own 26.2% of the voting rights, while Bhatt will own 39%. After a funding round in September 2020, the last private market valuation of
Robinhood was $ 11.7 billion. According to Forbes, this valuation turns Tenev and Bhatt into 4,444 billionaires, each worth a billion dollars.
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Robinhood The original S1 document filed earlier this month also revealed a restricted stock award incentive plan, the plan May generate billions of dollars in additional revenue for co-founders Tenev and Bhatt in the next few years. In late May, Robinhood’s board approved the granting of 22,200,000 and 13,320,000 units of restricted shares to Tenev and Bhatt, respectively, to be awarded based on the performance of the company’s shares within 8 years thereafter. to the IPO.
If Tenev and Bhatt achieve each of these price-based trading milestones, from Robinhood reaching $ 120 per share to $ 300 per share, based on current prices, the total value of the reward will exceed 7.5 billion Dollars. Tenev can earn an additional $ 4.7 billion, while Bhatt can earn more than $ 2.8 billion. After
met as a student at Stanford University in 2005, the two co-founded Robinhood in 2012. They launched a business app in 2013 with a mission to “democratize finance for everyone.” Robinhood pioneered commission-free trading, disrupting the entire brokerage industry and eventually leading bigger competitors like ETrade, Schwab, and TD Ameritrade to follow suit and slash fees. Since the 2020 coronavirus pandemic, Robinhood’s business has grown exponentially. As hordes of millennials use the app to trade stocks and options during the quarantine, its active users have surpassed 21 million. However, the rise of
Robinhood was not without the hassles of growth – the company has been plagued with technical problems and regulatory scrutiny. Last month, Robinhood received a record $70 million fine from the regulator FINRA, which revealed how the company lost client funds due to prolonged power outages and erroneously sending margin calls in millions of trading operations.
In June 2020, Forbes first reported that 20-year-old Robinhood customer Alex Kearns committed suicide after seeing a negative balance of $730,000 in his account due to options trading. Two days later, the founder of Robinhood promised to adjust eligibility standards, educational resources, and update the user interface to suit the customer’s business choices. The Karnes family sued Robin Hood in a negligent death lawsuit in February.
Robinhood has also been criticized for its way of making money. In August last year, a Forbes survey clarified how the company derives most of its business income from its clients’ speculative options transactions. According to documents from the US Securities and Exchange Commission, a large part of Robinhood’s business income, more than 80%, comes from so-called “order flow payments,” which essentially sell customer orders to giants. commercials such as Citadel Securities.

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