Topline
One day after a record fine from regulators, trading platform Robinhood Financial disclosed a slew of financials for the first time ever Thursday in a regulatory filing ahead of the company’s long-awaited initial public offering, revealing a $1.4 billion first-quarter loss despite massive growth fueled by frenzied stock trading and all-time market highs during the pandemic.
Robinhood says it has 18 million users who collectively hold nearly $81 billion on its platform.
Key Facts
Robinhood reported revenue of $522 million in the first quarter, more than 300% above sales pulled in the same period last year, according to the Thursday filing.
Despite the stunning sales growth, the company posted a first-quarter loss of more than $1.4 billion after a $1.5 billion accounting expense related to the company’s ballooning debt this year amid the market’s increased volatility.
The buzzy online brokerage reported 18 million cumulative funded accounts and active monthly users, nearly 30% more than the 13 million users the customer claimed prior to the filing.
All told, Robinhood says its customers hold nearly $81 billion in their portfolios, including $65 billion in equities, and nearly $12 billion in cryptocurrencies.
Robinhood plans to trade under the ticker HOOD as soon as the end of this month.
The new filing comes the day after Robinhood was fined nearly $70 million for a slew of charges—including misleading customers—levied by the Financial Industry Regulatory Authority, marking the agency’s biggest fine against a business ever.
Key Background
Troubled by unprecedented market volatility, system outages and risky debt-laced trading, Robinhood and its billionaire cofounders have faced mounting regulatory scrutiny during the pandemic’s market boom. According to a Bloomberg report last week, the Securities and Exchange Commission is delaying Robinhood’s IPO after the agency in December said the company repeatedly misled customers about its revenue sources and failed to meet trade-execution standards—a practice that ultimately left customers out on more than $34 million over a period of three years. In April, the Massachusetts Securities Division, which previously accused Robinhood of gamifying its platform and steering customers to bad investments, filed an administrative complaint against the brokerage for allegedly failing to protect vulnerable investors and posing a “substantial and continued risk to Massachusetts investors.” The regulator is seeking a revocation of Robinhood’s state brokerage license.
Surprising Fact
After Robinhood placed trading restrictions on many so-called meme stocks that skyrocketed and crashed in late January, the Department of Justice reportedly executed a search warrant to obtain CEO Vlad Tenev’s cell phone, the regulatory filing discloses.
Big Number
$11.7 billion. That was Robinhood’s valuation after a $660 million funding round in September.
Further Reading
Robinhood Pays $65 Million To SEC For Misleading Customers Who Lost $34 Million On Inferior Trade Prices (Forbes)
The Future Of Investing: Fintech 50 2021 (Forbes)
