Robinhood unveils long-awaited IPO documents that reveal staggering growth

• Robinhood publicly filed its IPO documents with the SEC on Thursday.
• The company confidentially submitted a draft registration back in March.
• The startup was founded in 2013 and has taken the investing world by storm.

Robinhood, the popular retail investing app, publicly filed for an IPO on Thursday.

The company's S-1 document filed with the Securities and Exchange Commission revealed plans to be listed on the Nasdaq stock market under the ticker symbol HOOD.

The Silicon Valley-based company was founded in 2013 by Vlad Tenev and Baiju Bhatt, and took the investing world by storm by enabling users to trade stocks and ETFs for free on its mobile app. During 2020, its popularity rose to new heights as amateur investing surged amid the coronavirus pandemic.

In the filing, Robinhood revealed it had 18.5 million funded accounts and $80 billion in customer assets as of March 31, more than double the prior years. Over 50% of the users are first-time investors, and the founders said they plan to continue to make financial investing more accessible. The company said it wants to set aside as much as 35% of its shares for individual investors.

"We'd rather serve many small customers than a few large ones, and, while our competitors strive to go further 'upmarket,' we continue to see opportunity in serving those left behind, including underbanked customers, not just in the United States but all over the world," they said in a letter to shareholders.

Robinhood makes money through a practice known as "payment for order flow," in which retail brokers route trade requests to other firms to execute in exchange for a commission. Last year, Robinhood derived 75% of its total revenue from payment for order flow and transaction rebates.

The company said that a majority of those revenues go through just 4 market makers, a potential risk if one decides to invest in the startup.

The filing is one of the public's first comprehensive looks at Robinhood's financials. In 2020, its revenue grew 245% to hit $959 million, while it reversed losses to post a $6.3 million profit. However, the first quarter of 2021 saw a $1.4 billion loss.

Robinhood said there is tremendous regulatory risk for its stock. On Wednesday, the company was fined $70 million by the securities industry's self-regulator, FINRA, for misleading customers and system outages that the agency said hurt Robinhood's customers. The startup said it will likely incur similar fines in the future.

Goldman Sachs and JPMorgan are leading the offering.