It’s been a busy 2021 for Robinhood, and the investing app’s greatest problem of the yr is about to reach within the coming weeks within the type of its long-anticipated IPO. However will Robinhood’s multi-billion greenback flotation ship retail investing social?
Robinhood has discovered itself on the middle of a brief squeeze surrounding the meme inventory GameStop and have become embroiled in a confrontation with Wall Road stalwarts Warren Buffett and Charlie Munger. The app additionally crashed throughout a current bull run on the meme-based cryptocurrency, Dogecoin.
Regardless of loads of unfavourable press over the course of the yr, Robinhood has skilled exponential development and has emerged as a number one on-line brokerage for particular person buyers.
Robinhood is likely one of the fastest-growing fintech startups and has emerged as one in all Silicon Valley’s most respected non-public unicorns. Because the begin of the pandemic, Robinhood has outpaced many different investing app downloads – together with that of cryptocurrency giants Coinbase.
With a present valuation of round $11.7 billion, and vital backers like Sequoia Capital and Andreessen Horowitz, NEA, Kleiner Perkins and Alphabet, it’s anticipated that Robinhood’s IPO may result in a valuation of no less than $30 billion.
Bringing Energy to Retail Buyers
Considerably, Robinhood has opened its IPO as much as retail buyers as a part of the corporate’s bid to democratize preliminary public choices.
The current announcement of Robinhood’s IPO Entry service represents a major step in the direction of making IPOs a real funding alternative for retail buyers the place, most often, preliminary public choices are usually reserved for institutional buyers which are able to shopping for many shares in a single transaction.
Robinhood states that its mission is to democratize finance for all. In democratizing IPOs, it seems that the corporate is making waves in opening areas of investing as much as new customers.
Because the investing app’s utilization stats point out, 2020 noticed an enormous surge in retail buyers selecting to put their finance in shares and shares. Maxim Manturov, Head of Funding Analysis at Freedom Finance Europe defined that this increase to the quantity of buyers “truly seems just like the consequence of the pandemic and the stimulation packages that adopted. This created a pool of funds retail buyers may begin investing into shares. As per Constancy report, there have been 26M retail accounts in 2020, i.e. up 17% in comparison with 2019, whereas the day by day buying and selling quantity doubled.”
Robinhood’s app makes investing a simple course of which has helped to encourage many people world wide to put their cash into shares. Nonetheless, these freedoms seem to have led to some vital surges in investments in meme-based shares like GameStop and Dogecoin – indicating that whereas the brokerage is enjoying an important position in making shares and IPOs obtainable for all, it’s additionally helped to leverage some uncommon buying and selling patterns.
May Robinhood’s IPO Deliver Extra Meme Investing?
Robinhood took in no less than $110 million on account of the GameStop meme inventory rally at the start of 2020. As plenty of buyers congregated on Reddit to resolve to generate a brief squeeze on GameStop, we noticed the ability of social media result in widespread losses for hedge funds.
Whereas this occasion was heralded as one thing of an rebellion in opposition to the ability of hedge funds, many retail buyers misplaced out as they unwittingly purchased the highest of the GameStop worth surge.
The variety of charges that Robinhood obtained from promoting its customers inventory orders to Wall Road corporations climbed to $331 million within the first three months of 2021 in response to Alphacution statistics. This determine is considerably larger than the $221 million the corporate made within the remaining three months of 2020 – it’s additionally a lot larger than the $91 million Robinhood gained from the identical charges at the start of 2020.
Because the central position that Robinhood performed within the GameStop brief squeeze, the platform additionally not too long ago crashed as social sentiment for Dogecoin, a cryptocurrency listed on the app and supported by Elon Musk, reached a fever pitch. As a digital foreign money that has actually been constructed on a meme in 2013 and hasn’t undergone an replace since 2019, Dogecoin represents an ideal instance of a meme funding.
Regardless of its fundamentals, and a struggling cryptocurrency market over the previous couple of months, Dogecoin’s worth has surged all through 2021, with the coin experiencing an increase of virtually 14,000% over the span of 12 months.
Robinhood has been assured sufficient to listing Dogecoin since mid-2018, and as buyers on the app have grown in current months, so too has the worth of the cryptocurrency. With the upcoming flotation of Robinhood on Wall Road set to carry even better publicity to one of many fastest-growing brokerage apps because the begin of the COVID-19 pandemic, we may even see additional funding in meme-based shares going down sooner or later.
Whether or not the social sentiment in the direction of the following asset pump will likely be centered on conventional markets or cryptocurrency stays to be seen, however with the convenience through which retail buyers can plan brief squeezes, it’s seemingly solely a matter of time earlier than one other GameStop case takes place.