Robinhood Markets Inc. released the documentation for its long-awaited initial public offering on Thursday, detailing how the flood of day-to-day investors in the stock market has supercharged the growth of the trading app.
Robinhood, which plans to trade on Nasdaq under the ticker symbol HOOD, generated $ 522 million of revenue in the first quarter, primarily from trading activity, more than four times its level since the first quarter of 2020. More than $ 4 of every $ 5 Robinhood earned on first-quarter revenue came from payments it received from high-speed trading companies to which it routed clients’ stocks, options and cryptocurrency trades, a controversial practice known as order-flow pay.
The number of accounts funded at Robinhood jumped to 18 million at the end of March, more than doubling the year before, as everyday investors signed up in droves to participate in rallies on shares of memes like GameStop Corp. and cryptocurrencies like dogecoin. .
Despite the increase in users and trade-based revenue, Robinhood reported a first-quarter loss of $ 1.4 billion.
The first-quarter loss was largely due to a one-time charge of $ 1.5 billion, related to an emergency fundraiser in late January at the height of the GameStop rally. The clearinghouse that processes and settles Robinhood’s trades asked the company to put up billions of dollars in additional collateral to cover potential losses in volatile trades, prompting Robinhood to restrict the trading of certain high-yielding stocks. until he could complete a convertible note sale.