A logo for share trading app Robinhood on a smartphone. The company added more than 4 million new users in the three months to June 30 due to "exceptionally strong interest" in trading, particularly cryptocurrencies. AP Photo
A logo for share trading app Robinhood on a smartphone. The company added more than 4 million new users in the three months to June 30 due to "exceptionally strong interest" in trading, particularly cryptocurrencies. AP Photo
A logo for share trading app Robinhood on a smartphone. The company added more than 4 million new users in the three months to June 30 due to "exceptionally strong interest" in trading, particularly cryptocurrencies. AP Photo
A logo for share trading app Robinhood on a smartphone. The company added more than 4 million new users in the three months to June 30 due to "exceptionally strong interest" in trading, particularly c

Robinhood could be valued at $35bn through Nasdaq listing


Michael Fahy
  • English
  • Arabic

The company behind share trading app Robinhood could be valued at up to $35 billion through its initial public offering, according to a regulatory filing.

Robinhood Markets, the Silicon Valley-based company behind the controversial app that is popular with younger investors, set a price range of $38 to $42 per share for its listing on Nasdaq Dubai. It is planning to list 55 million shares, raising up to $2.3bn in proceeds.

"We're proud to serve this next generation of investors and it's painful to see them continually lambasted in the news reports. Anecdotes of people winning (and losing) large amounts of money garner more attention than the pedestrian truths – the majority of our customers like to buy and hold," co-founders Vlad Tenev and Baiju Bhatt said in an introductory letter to the company's prospectus.

Robinhood offers users free share trading as well as the ability to buy and sell more exotic instruments such as options and cryptocurrencies.

In an updated prospectus filing on Monday, the company said it had 22.5 million funded accounts as of June 30, up from 18 million at the end of March and a 130 per cent increase on the same period last year. It expects revenue to increase by about 129 per cent year-on-year to between $546 million and $$574m and the amount of assets under its custody to grow to $102bn – more than trebling from $33bn a year earlier.

The $35bn valuation it could achieve at the top end of the IPO range is a sizeable uplift from the $11.7bn it attracted in September last year through a late stage (Series G) funding round, when it raised $660m from investors including venture capital firms Andreessen Horowitz, Sequoia Capital and D1 Capital Partners.

Robinhood has attracted criticism for the 'gamification' of investing and for not doing enough to make clear to users some of the risks involved in the trades they embark upon. It is being sued by the family of a 20-year-old share trader in the US who committed suicide after mistakenly believing he had run up huge losses. Robinhood also generates most of its revenue through payment for order flow, with market makers paying the company to route its customers' trades through them – a practice banned in other markets such as Canada and the UK.

The prospectus highlighted a number of risks, including a slowdown in the growth of new users over the next three months. The June quarter had witnessed an "exceptionally strong interest in trading, particularly in cryptocurrencies".

It also warned that new regulations could disrupt its business model, including a potential ban on payment for order flow.

The company has already faced action from regulators, making a $65m payment to the US Securities and Exchange Commission in December to settle a case brought against it for "repeated misstatements" that failed to declare to its customers that it was being paid to route their orders through certain brokers.

"We expect to continue to be subject to such proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business," the prospectus said.

Robinhood intends to use net proceeds of about $2bn from the listing to repay loans, for working capital and "general corporate purposes" including hiring new staff and expanding its customer support operations.

"Robinhood is a controversial company," Martin Boujol, a strategy assistant to the chief investment officer at Swiss digital bank Flowbank, said in a note to clients earlier this month. "On one hand, it empowered millions of retail investors, democratised investing and can show rather solid financial fundamentals. On the other, it is not certain that the company will be able to maintain growth and new SEC regulations could heavily compromise [its] commission-free offering."

UAE SQUAD

Ahmed Raza (Captain), Rohan Mustafa, Jonathan Figy, CP Rizwan, Junaid Siddique, Mohammad Usman, Basil Hameed, Zawar Farid, Vriitya Aravind (WK), Waheed Ahmed, Karthik Meiyappan, Zahoor Khan, Darius D'Silva, Chirag Suri

Should late investors consider cryptocurrencies?

Wealth managers recommend late investors to have a balanced portfolio that typically includes traditional assets such as cash, government and corporate bonds, equities, commodities and commercial property.

They do not usually recommend investing in Bitcoin or other cryptocurrencies due to the risk and volatility associated with them.

“It has produced eye-watering returns for some, whereas others have lost substantially as this has all depended purely on timing and when the buy-in was. If someone still has about 20 to 25 years until retirement, there isn’t any need to take such risks,” Rupert Connor of Abacus Financial Consultant says.

He adds that if a person is interested in owning a business or growing a property portfolio to increase their retirement income, this can be encouraged provided they keep in mind the overall risk profile of these assets.

UAE currency: the story behind the money in your pockets

21 Lessons for the 21st Century

Yuval Noah Harari, Jonathan Cape
 

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Cultural fiesta

What: The Al Burda Festival
When: November 14 (from 10am)
Where: Warehouse421,  Abu Dhabi
The Al Burda Festival is a celebration of Islamic art and culture, featuring talks, performances and exhibitions. Organised by the Ministry of Culture and Knowledge Development, this one-day event opens with a session on the future of Islamic art. With this in mind, it is followed by a number of workshops and “masterclass” sessions in everything from calligraphy and typography to geometry and the origins of Islamic design. There will also be discussions on subjects including ‘Who is the Audience for Islamic Art?’ and ‘New Markets for Islamic Design.’ A live performance from Kuwaiti guitarist Yousif Yaseen should be one of the highlights of the day. 

Coffee: black death or elixir of life?

It is among the greatest health debates of our time; splashed across newspapers with contradicting headlines - is coffee good for you or not?

Depending on what you read, it is either a cancer-causing, sleep-depriving, stomach ulcer-inducing black death or the secret to long life, cutting the chance of stroke, diabetes and cancer.

The latest research - a study of 8,412 people across the UK who each underwent an MRI heart scan - is intended to put to bed (caffeine allowing) conflicting reports of the pros and cons of consumption.

The study, funded by the British Heart Foundation, contradicted previous findings that it stiffens arteries, putting pressure on the heart and increasing the likelihood of a heart attack or stroke, leading to warnings to cut down.

Numerous studies have recognised the benefits of coffee in cutting oral and esophageal cancer, the risk of a stroke and cirrhosis of the liver. 

The benefits are often linked to biologically active compounds including caffeine, flavonoids, lignans, and other polyphenols, which benefit the body. These and othetr coffee compounds regulate genes involved in DNA repair, have anti-inflammatory properties and are associated with lower risk of insulin resistance, which is linked to type-2 diabetes.

But as doctors warn, too much of anything is inadvisable. The British Heart Foundation found the heaviest coffee drinkers in the study were most likely to be men who smoked and drank alcohol regularly.

Excessive amounts of coffee also unsettle the stomach causing or contributing to stomach ulcers. It also stains the teeth over time, hampers absorption of minerals and vitamins like zinc and iron.

It also raises blood pressure, which is largely problematic for people with existing conditions.

So the heaviest drinkers of the black stuff - some in the study had up to 25 cups per day - may want to rein it in.

Rory Reynolds

Updated: July 19, 2021, 1:46 PM`