Robinhood Markets on Thursday set the stage for its hotly anticipated IPO, as it revealed rapid growth in users of its trading app in a filing, while also flagging a swathe of investigations by prosecutors and regulators.
The company, under scrutiny after this year's trading frenzy for so-called meme stocks such as GameStop, is aiming for an IPO valuation of over $40 billion.
Robinhood's IPO filing detailed for the first time how the trading mania, which has swept amateur investors, fuelled a four-fold jump in its revenue over January to March, and also how its quick expansion came at a cost.
It reported a net loss of $1.4bn for the period, after borrowing $3.5bn via convertible bonds to backstop the wave of trading orders amid the rally in a few stocks, which had been shorted by hedge funds and championed by individual investors in online chatrooms, including Reddit's WallStreetBets.
Its handling of the meme stock frenzy, marred with glitches and followed by trading restrictions, attracted the wrath of many of its users and US lawmakers.
Legal authorities and regulators, that were already looking into Robinhood's aggressive marketing to investors and how it profits off trading orders, doubled down on their scrutiny.
A probe by the US attorney's office in California even resulted in a search warrant for Robinhood co-founder and chief executive Vlad Tenev's cell phone, the IPO filing shows.
A spokesperson for the US Attorney's Office in Northern California declined to comment.
Earlier this week, the Menlo Park, California-based company agreed to pay a $70 million fine as part of a settlement with US financial regulators who accused it of failing to vet its customers and implement risk controls.
Robinhood and chief executive MrTenev have been subpoenaed and received requests for information from several government bodies, including the US Justice Department and the US Securities and Exchange Commission, according to the filing.
The company was also sued this year by the family of a 20-year-old stock trader who committed suicide. The family cited the app's "misleading communications" that caused their son to panic over what he wrongly believed were huge market losses.
A majority of Robinhood's revenue is derived from "payment for order flow". Under this practice, brokers receive a fee from market makers for routing trades to them.
Critics argue this creates a conflict of interest situation, whereby brokers are incentivised to send orders to whoever pays the most, which might not necessarily be the best deal for customers. Regulators are scrutinising Robinhood over it.
In the first quarter of this year, 59 per cent of Robinhood's revenue came from four market makers. Its revenue last year rose to $959m, the company said.
Robinhood turned profitable in 2020, reporting a net income of $7m, versus a loss of $107m in 2019.
The company held about $12bn in cryptocurrency assets under custody as of March 31, 2021, a 23-fold jump from a year earlier. More than 9.5 million customers traded about $88bn of cryptocurrency on Robinhood's platform during the same period.
Founded in 2013 by Stanford University roommates Mr Tenev and Baiju Bhatt, Robinhood's trading app has made it easier for the masses to trade securities and electrified a generation of retail traders.
The platform's easy-to-use interface allowed it to become a go-to for young investors stuck at home due to the pandemic and its popularity has soared over the past 18 months.
Arguably the breakout financial technology start-up of its generation, Robinhood has captured the imagination of Silicon Valley's biggest investors, who have poured billions of dollars into the company. It challenges age-old rules around investing by dismissing the role of financial advisers.
"Some pundits deride individual stock ownership and say that people should only be investing in passively-managed funds through an adviser. We reject this, and we believe that it's important to be able to own stocks directly in the companies you love, without any middlemen," Mr Tenev and Mr Bhatt said in the IPO filing.
Robinhood said underwriters would reserve between 20 per cent and 35 per cent of its Class A shares for sale to customers through its IPO Access feature, a platform it unveiled in May to give retail investors the opportunity to snap up shares in IPOs.
Robinhood has raised over $5.5bn from investors since its launch, including Ribbit Capital, ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates.
Its valuation nearly tripled in the last year alone, with a financing in February valuing the company at around $30bn, according to people familiar with matter.
The online brokerage plans to list on the Nasdaq under the symbol "HOOD".
Goldman Sachs and JP Morgan are the lead underwriters for the offering.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
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COMPANY%20PROFILE
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U19 World Cup in South Africa
Group A: India, Japan, New Zealand, Sri Lanka
Group B: Australia, England, Nigeria, West Indies
Group C: Bangladesh, Pakistan, Scotland, Zimbabwe
Group D: Afghanistan, Canada, South Africa, UAE
UAE fixtures
Saturday, January 18, v Canada
Wednesday, January 22, v Afghanistan
Saturday, January 25, v South Africa
UAE squad
Aryan Lakra (captain), Vriitya Aravind, Deshan Chethyia, Mohammed Farazuddin, Jonathan Figy, Osama Hassan, Karthik Meiyappan, Rishabh Mukherjee, Ali Naseer, Wasi Shah, Alishan Sharafu, Sanchit Sharma, Kai Smith, Akasha Tahir, Ansh Tandon
At a glance
Fixtures All matches start at 9.30am, at ICC Academy, Dubai. Admission is free
Thursday UAE v Ireland; Saturday UAE v Ireland; Jan 21 UAE v Scotland; Jan 23 UAE v Scotland
UAE squad Rohan Mustafa (c), Ashfaq Ahmed, Ghulam Shabber, Rameez Shahzad, Mohammed Boota, Mohammed Usman, Adnan Mufti, Shaiman Anwar, Ahmed Raza, Imran Haider, Qadeer Ahmed, Mohammed Naveed, Amir Hayat, Zahoor Khan
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
FIGHT CARD
Sara El Bakkali v Anisha Kadka (Lightweight, female)
Mohammed Adil Al Debi v Moaz Abdelgawad (Bantamweight)
Amir Boureslan v Mahmoud Zanouny (Welterweight)
Abrorbek Madaminbekov v Mohammed Al Katheeri (Featherweight)
Ibrahem Bilal v Emad Arafa (Super featherweight)
Ahmed Abdolaziz v Imad Essassi (Middleweight)
Milena Martinou v Ilham Bourakkadi (Bantamweight, female)
Noureddine El Agouti v Mohamed Mardi (Welterweight)
Nabil Ouach v Ymad Atrous (Middleweight)
Nouredin Samir v Zainalabid Dadachev (Lightweight)
Marlon Ribeiro v Mehdi Oubahammou (Welterweight)
Brad Stanton v Mohamed El Boukhari (Super welterweight
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Getting there
The flights
Emirates and Etihad fly to Johannesburg or Cape Town daily. Flights cost from about Dh3,325, with a flying time of 8hours and 15 minutes. From there, fly South African Airlines or Air Namibia to Namibia’s Windhoek Hosea Kutako International Airport, for about Dh850. Flying time is 2 hours.
The stay
Wilderness Little Kulala offers stays from £460 (Dh2,135) per person, per night. It is one of seven Wilderness Safari lodges in Namibia; www.wilderness-safaris.com.
Skeleton Coast Safaris’ four-day adventure involves joining a very small group in a private plane, flying to some of the remotest areas in the world, with each night spent at a different camp. It costs from US$8,335.30 (Dh30,611); www.skeletoncoastsafaris.com
Three ways to boost your credit score
Marwan Lutfi says the core fundamentals that drive better payment behaviour and can improve your credit score are:
1. Make sure you make your payments on time;
2. Limit the number of products you borrow on: the more loans and credit cards you have, the more it will affect your credit score;
3. Don't max out all your debts: how much you maximise those credit facilities will have an impact. If you have five credit cards and utilise 90 per cent of that credit, it will negatively affect your score.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
City's slump
L - Juventus, 2-0
D - C Palace, 2-2
W - N Forest, 3-0
L - Liverpool, 2-0
D - Feyenoord, 3-3
L - Tottenham, 4-0
L - Brighton, 2-1
L - Sporting, 4-1
L - Bournemouth, 2-1
L - Tottenham, 2-1
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
UAE currency: the story behind the money in your pockets
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
More on animal trafficking
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Yemen's Bahais and the charges they often face
The Baha'i faith was made known in Yemen in the 19th century, first introduced by an Iranian man named Ali Muhammad Al Shirazi, considered the Herald of the Baha'i faith in 1844.
The Baha'i faith has had a growing number of followers in recent years despite persecution in Yemen and Iran.
Today, some 2,000 Baha'is reside in Yemen, according to Insaf.
"The 24 defendants represented by the House of Justice, which has intelligence outfits from the uS and the UK working to carry out an espionage scheme in Yemen under the guise of religion.. aimed to impant and found the Bahai sect on Yemeni soil by bringing foreign Bahais from abroad and homing them in Yemen," the charge sheet said.
Baha'Ullah, the founder of the Bahai faith, was exiled by the Ottoman Empire in 1868 from Iran to what is now Israel. Now, the Bahai faith's highest governing body, known as the Universal House of Justice, is based in the Israeli city of Haifa, which the Bahais turn towards during prayer.
The Houthis cite this as collective "evidence" of Bahai "links" to Israel - which the Houthis consider their enemy.
Dunki
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Liverpool 4-1 Shrewsbury
Liverpool
Gordon (34'), Fabinho (44' pen, 90' 3), Firmino (78')
Shrewsbury
Udoh (27'minutes)
Man of the Match: Kaide Gordon (Liverpool)
Profile of MoneyFellows
Founder: Ahmed Wadi
Launched: 2016
Employees: 76
Financing stage: Series A ($4 million)
Investors: Partech, Sawari Ventures, 500 Startups, Dubai Angel Investors, Phoenician Fund
The specs
BMW M8 Competition Coupe
Engine 4.4-litre twin-turbo V8
Power 625hp at 6,000rpm
Torque 750Nm from 1,800-5,800rpm
Gearbox Eight-speed paddleshift auto
Acceleration 0-100kph in 3.2 sec
Top speed 305kph
Fuel economy, combined 10.6L / 100km
Price from Dh700,000 (estimate)
On sale Jan/Feb 2020
