Interpret the three major points of Robinhood's prospectus, and see through its market positioning and growth potential

Author | Qin Xiaofeng

Editor | Hao Fangzhou

Produced | Odaily

Author | Qin XiaofengThe offering was led by Goldman Sachs, JPMorgan, Barclays, Citigroup, Wells Fargo, Mizuho and others, and Robinhood pegged its valuation at the time of listing at at least $40 billion., plans to raise up to US$100 million and plans to list on NASDAQ with the stock code "HOOD".

The offering was led by Goldman Sachs, JPMorgan, Barclays, Citigroup, Wells Fargo, Mizuho and others, and Robinhood pegged its valuation at the time of listing at at least $40 billion.

At the beginning of this year, with the two out-of-circle events of GME and Dogecoin (Dogecoin), Robinhood has attracted much attention in the encryption market. Odaily also flipped through its prospectus for the first time, and circled the key content for readers.

1. You can trade, but you cannot withdraw coins

2. The transaction volume surged in the first quarter, and Dogecoin took the lead

It should be noted that, like Robinhood's stock trading, crypto trading also does not charge commissions - it provides commission-free cryptocurrency trading through its subsidiary RHC - RHC will send customer orders to third-party market makers for execution and resell the order flow, cash flow. Moreover, RHC currently does not allow customers to recharge and withdraw legal currency and cryptocurrency directly at RHC. Customers must have both a brokerage account with RHF and sufficient legal currency funds in the brokerage account to fund cryptocurrency purchases through RHC; customers must also have a A brokerage account to which the proceeds of a client's sale of cryptocurrencies can be credited.

(Odaily Note: Although the US version of "Alipay" Paypal can purchase cryptocurrency, it also does not support cryptocurrency recharge and withdrawal.)

In the prospectus, Robinhood stated that "we may provide this feature in the future," but also expressed risks and concerns. "Allowing customers to store and withdraw cryptocurrencies on our platform may expose us to increased risk of possible violations of trade sanctions, including OFAC's regulations, and anti-money laundering and counter-terrorist financing laws."

2. The transaction volume surged in the first quarter, and Dogecoin took the lead

According to the prospectus, in the first quarter of 2021 alone, more than 9.5 million customers traded about $88 billion in cryptocurrency on Robinhood; On March 31, it increased 23 times.

It should be noted that as of the end of the first quarter, the total number of registered users of Robinhood was 17.7 million, which also means that more than half of the users are involved in cryptocurrency transactions.

also,According to the prospectus, in the first quarter of 2021 alone, more than 9.5 million customers traded about $88 billion in cryptocurrency on Robinhood; On March 31, it increased 23 times.secondary title

Robinhood also hinted at the risks in the prospectus. "If the Dogecoin market deteriorates or the price of Dogecoin declines, and demand for Dogecoin trading falls and is not replaced by new demand for other cryptocurrencies that are tradable on our platform, our business, financial condition and operations will Results may be adversely affected."

Of course, Robinhood remains optimistic about the entire encryption market and does not rule out the possibility of further expansion of cryptocurrency transactions in the future. “We believe that growing interest in and adoption of cryptocurrencies will drive increased client interest in our platform. Even within our current client base, we have significant room to grow.”

3. From retail investors to retail investors

As an emerging force among U.S. brokerages, Robinhood has always had a clear positioning—targeting retail investors. To this end, it has designed a simple and easy-to-use user interface to help retail investors lower the barriers to entering the stock market. In the prospectus, Robinhood stated that "our business model is focused on enabling a broad range of retail investors to access financial markets."

It is based on this concept that Robinhood first launched commission-free transactions that benefit retail investors. This move caused a huge tsunami in the industry, forcing other securities companies to adopt a zero transaction fee model.

3. From retail investors to retail investorsAs an emerging force among U.S. brokerages, Robinhood has always had a clear positioning—targeting retail investors. To this end, it has designed a simple and easy-to-use user interface to help retail investors lower the barriers to entering the stock market. In the prospectus, Robinhood stated that "our business model is focused on enabling a broad range of retail investors to access financial markets."It plans to allocate 20% to 35% of the Class A shares in its IPO to retail investors, and users can participate in the subscription through a new feature called IPO Access provided on Robinhood.

However, since the beginning of this year, Robinhood has also been deeply involved in the whirlpool of public opinion. During the GME defense war, due to the system's unloading, Robinhood went down directly, so it was crowned with the title of "capitalist lackey" and other titles; the same system failure occurred again during the Dogecoin transaction, which caused dissatisfaction among users. In addition, Robinhood indirectly caused a user to commit suicide due to a system display error (displaying that the user owed 750,000 yuan)... These negative news have seriously damaged its brand.

Just a day before the IPO announcement, FINRA ordered Robinhood to pay roughly $70 million in fines and order compensation to customers it said had suffered "widespread and material harm." Robinhood reported in its filing that it had reached an agreement in principle with regulators to pay a $57 million fine but only compensate affected users $4.5 million.

Truly practice the concept of "coming from retail investors and going to retail investors".