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The stock market of 2020 was unlike any other. With the fear of the COVID-19 pandemic causing economic disruptions, February and March saw massive sell-offs, only to have U.S. history’s briefest recession end about two months later. However, the volatility of capital markets continued to ripple.
The massive swings in stock and index prices seen over 2020 and 2021 were due in part to a new swath of traders, aided by the influence of one brokerage in particular. Robinhood Markets Inc. (HOOD) emerged in 2015 with a wholly disruptive business model – commission free trading. As its popularity grew, other brokerages had to follow suit. No longer would household retail investors be barred from becoming frequent traders.
With its IPO occurring during the week of July 26, the company which set out to “democratize finance for all,” will be fully tradable on the open market for all those retail investors whom the company itself helped foster. (See the IPO calendar on TipRanks)
With the onset of government mandated lockdowns during 2020, many retail investors sat at home with time to spare and mobile phones ready to be used. Many capital injections from the U.S. Treasury traveled the trajectory from stimulus checks to investment in equities and securities. Robinhood recorded millions of new users, and by the end of the year, it finally became a profitable business.
Experiencing light speed growth, Robinhood saw a 105% increase in active monthly users year-over-year from March 31, 2021, and a 200% increase in revenue during that same period. Looking forward, management expects a quarterly increase of about 130% for the period ending in June. Additionally, the company estimates its user growth to be about double year-over-year ending in June.
A hot topic this week in the world of financial news, the Robinhood IPO could in a way display the retail trader’s sentiment toward the company, and also toward the stock market in general. Thus far, 2021 has seen more all-time-highs in major stock indices, and investors will be watching the event to see if the bullish tone can continue ringing.
Robinhood’s management is expecting the price per share to fall somewhere around $38 to $42, and if on the higher end could result in a valuation of about $35 billion.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.