FinTech App Robinhood Eyeing Initial Public Offering
2018 has been a pretty good year for the stock trading app Robinhood. Earlier this year the company introduced Robinhood Crypto, allowing users to buy and sell various cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and others. Additionally the app recently introduced support for options trading. Now, speaking at TechCrunch Disrupt SF, Robinhood CEO Baiju Bhatt revealed that the company is currently looking to go public.
As part of his announcement, Bhatt explained that the company is now seeking a chief financial officer. He also says Robinhood has been undergoing audits from the SEC and FINRA. Explaining the company’s decision, Bhatt said, “It’s something we think is very much in the future. Being a public company closely aligns with our mission. Not in the immediate term, but it’s something we’re thinking about.”
While Robinhood has enjoyed some great success — boasting more than five million customers and a valuation of $5.6 billion — there are some challenges it will need to contend with as it prepares to go public. For example some of the brokerage firms that Robinhood’s fee-free stock trading undercut are starting to fight back. Among them, JP Morgan Chase recently announced it would allow customers to make up to 100 free trades in their first year, with said offer renewing for Premier-level accountholders. Additionally, with Robinhood arguing that their Crypto offering has helped and will continue to help attract customers to the app, slumping cryptocurrency prices might lead some to question if the strategy is as effective as it might have been, say, a year ago. Still TechCrunch notes that Robinhood has twice as many accountholders as rivals such as E*Trade, while maintaining a staff of just 250 compared to E*Trade’s 4,000 — a stat that’s sure to impress some investors.
For the record, although trades made on the platform are free and many users don’t pay to use the app, Robinhood does monetize their services at higher levels. The company sells Gold subscriptions that give customers greater buying power. These services start as low as $10 a month. According to TechCrunch, the number of Gold memberships was increasing at a rate of 17% per month as of earlier this year.
Although it’s still unclear just what kind of a timeframe Bhatt has in mind when he says the move to go public would occur in the “medium to long-term,” this could certainly be an IPO to watch. At the same time the aforementioned questions coupled with the everpresent threat of a security breach could create a rough road for Robinhood. Of course it will also be interesting to see how another FinTech stock like Robinhood performs given some of the stumbles others in the FinTech space have seen. In any case, expect greater growth from the app and a continued focus on user acquisition and features.