(Bloomberg)-According to people familiar with the matter, Robinhood Markets Inc., the trading platform behind GameStop Corp.’s stock price plunge, plans to apply for an IPO in March in a confidential manner. .
People familiar with the matter said the company has negotiated with the underwriters in the past week and hopes to apply within a few weeks. People familiar with the matter said that there is no final decision yet, and time may change.
Robinhood was valued at $11.7 billion in a round of financing last year. It raised financing this year and will convert it into IPO equity. Bloomberg reported that the first batch will be converted at a valuation of 30 billion U.S. dollars or 30% of the IPO discount, whichever is lower, and the second batch will be converted at a 30% IPO discount or a valuation of 33 billion U.S. dollars. The lower one shall prevail.
A representative for Robinhood, based in Menlo Park, California, declined to comment.
During the pandemic, Robinhood’s popularity surged as young people living at home turned to its trading app to make money and spend time. The company has been planning an initial public offering in 2021
Robinhood must relax credit lines and raise $3.4 billion from its backers to issue more collateral to Depository Trust & Clearing Corp., the clearinghouse in the industry. Given the sharp volatility in the stocks of video game retailer GameStop and movie theater chain AMC Entertainment Holdings Inc., DTCC hopes that members will release more cash to ensure that they can liquidate transactions.
Robinhood also faces strong political and customer opposition because it temporarily restricts the trading of GameStop and other stocks.
Robinhood Financial said in a document on Friday that it is in talks with the Financial Industry Regulatory Authority to resolve investigations into application interruptions and options trading in March 2020. The document shows that the US Securities and Exchange Commission and FINRA are reviewing how Robinhood displays cash and purchasing power to customers and its option trading approval process.
According to Bloomberg News, the company has been considering selling some of its shares in its initial public offering directly to its users. Such a move would be amazing, because retail investors usually do not buy new shares at the issue price. Instead, they usually have to make a hasty investment on the first day of the transaction, which may drive up the stock price.
(FINRA reviewed the 2020 issue update in the eighth paragraph.)
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