(Bloomberg) – Robinhood Markets Inc., the trading platform behind the boom in GameStop Corp. shares, according to trustees, plans to be confidential for an initial public offering as soon as March. .
The company had talks with endorsers over the past week about continuing a submission within weeks, the people said they should not be identified because the case is not public. No final decision has been made and the timing could change, the people said.
Robinhood, which was valued at $ 11.7 billion in a round of funding last year, raised funding this year that will turn an IPO into equity. A first tranche is converted at a valuation of $ 30 billion or a 30% discount to the IPO, whichever is lower, with the second at the lowest of the 30% IPO discount or ‘ a valuation of $ 33 billion, reports Bloomberg.
A Robinhood representative, based in Menlo Park, California, declined to comment.
Robinhood exploded in popularity during the pandemic when young people who went home turned to the trading app to make money and give it time. The company, which has been aiming for a stock market move in 2021 since at least last year, experienced a cash crisis three weeks ago and has since undergone regulatory investigations, including a hearing convened by the House Financial Services Committee.
Robinhood had to withdraw its credit lines and raise $ 3.4 billion from its pillars to place more collateral at the Depository Trust & Clearing Corp., the industry’s clearinghouse. The DTCC wanted members to invest more cash to ensure they could complete transactions, given wild swings in stocks, including video game retailer GameStop and movie theater chain AMC Entertainment Holdings Inc.
Robinhood is also facing political and customer setbacks as it temporarily restricts trading in GameStop and other stocks.
Robinhood Financial said in a submission on Friday that it is in talks with the Financial Industry Regulatory Authority to settle an investigation into app interruptions in March 2020 and options trading. The U.S. Securities and Exchange Commission and FINRA are investigating according to the filing how Robinhood shows cash and purchasing power to clients and its options approval processes.
The company is considering selling some of its shares in its IPO directly to its own users, Bloomberg News reports. This is noticeable because small investors usually cannot buy at the offer price in new listings. Instead, they usually have to invest in a rush on the first day of trading that can increase the stock price.
(Updates to FINRA’s review of 2020 issues in eighth paragraph.)
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