Robinhood app on cell phones
Source: Robinhood Facebook

Robinhood’s Valuation Soars, IPO and Growth Could Challenge eToro

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Mar. 17 2021, Published 8:38 a.m. ET

Trading platform Robinhood is moving ahead with its IPO plans. The company will likely file confidentially for an IPO as early as March. When will Robinhood go public? Will it debut through a traditional IPO, a SPAC, or a direct listing? Can you invest in Robinhood before it goes public?

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Founded in 2013, Robinhood is a financial services company based in Menlo Park, Calif. The company is known for providing commission-free trades of stocks and ETFs through a mobile application.

robinhood ipo date
Source: Robinhood Facebook
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Robinhood versus eToro

Robinhood is exploring options to go public in 2021. The company’s customer growth, brand awareness, and valuation appear to be stronger than ever amid the GameStop trading chaos. JMP Securities analyst Devin Ryan estimates that Robinhood gained 3 million users in January alone. Ryan estimates that the company’s total users are now around 23 million.

The demand for Robinhood’s pre-IPO shares is also high. Recently, the stock traded at $52 per share compared to $15 per share in September 2020. Robinhood was valued at $40 billion in February 2021 compared to $12 billion in September 2021.

Robinhood rival eToro is the leading social trading and multi-asset brokerage firm. The company allows its users to trade stocks, ETFs, currencies, commodities, and cryptocurrencies. As of January 2021, eToro had 18.7 million registered users. 

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On March 16, eToro agreed to go public through a reverse merger with a blank-check company FinTech Acquisition Corp. V (FTCV). The FTCV SPAC stock was up 43 percent at $15.29 following the merger news. FTCV valued eToro at a pro forma implied equity value of $10.4 billion. Meanwhile, at FTCV’s current stock price, eToro is valued at around $15.9 billion. eToro expects to generate sales of $1.0 billion in 2021 and forecasts its sales growing by 17 percent in 2022 and 30 percent in 2023. The company expects to generate sales of $2.5 billion in 2025.

From a valuation perspective, eToro is valued at a 2021 price-to-sales multiple of around 10.2x and at a 2025 price-to-sales multiple of 4.1x. In contrast, Interactive Brokers trades at an NTM price-to-sales multiple of 13.4x.

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When is Robinhood going public?

Robinhood’s IPO date hasn't been set but it could happen in the coming months. The company plans to file confidentially for an IPO as soon as March, according to Bloomberg. In February, Robinhood held discussions with underwriters about moving ahead with a filing in the next few weeks, according to people familiar with the matter.

Usually, it takes about one or two months for companies to make their public debut after filing with the SEC. Robinhood hasn't made a definitive decision and the timeline could change. A representative for Robinhood declined to comment on the matter.

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robinhood ipo date
Source: Koyfin

FTCV Stock Price

How Robinhood will go public

Robinhood hasn't settled on whether to go public through a direct listing or a traditional IPO. However, the company has selected the Nasdaq as the exchange for its IPO, according to CNBC. Robinhood is reportedly in discussions with investment bank Goldman Sachs regarding an IPO that could value the company at about $20 billion. Also, there have been rumors that Robinhood plans to sell certain shares directly to its users in an IPO.

How to invest in Robinhood

To invest in Robinhood pre-IPO shares, you’ll need to go through the private market like the EquityZen platform. Unfortunately, the private market isn’t accessible to most individual investors because the SEC wants private market investors to be accredited. However, retail investors can buy Robinhood stock when it lands on stock exchanges through online brokers.

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