“What’s your favourite planet?” is an actual query that Robinhood execs actually picked to reply through the Q&A bit of its retail investor roadshow.
“Positively Pluto,” says long-haired CEO Vlad Tenev. He’s having time. He goes on to clarify that there can be an excellent view of Venus tonight after sundown.
Lots of the questions the administration picked have been lackluster; requested if Robinhood will add a buyer help line, Tenev cheerily explains there already is one. One other query is wasted on whether or not the inventory pays dividends — anybody who learn the prospectus is aware of the reply is not any.
I’m watching this roadshow — my first, and the primary, I believe, of many who’re watching — as a result of Robinhood plans to promote as a lot as a 3rd of its IPO to its customers. The roadshow is a part of a plan to place retail traders on an “equal footing” (per the prospectus) with institutional traders. On the high of the presentation, I’m informed that that is mainly the identical set of supplies institutional traders get.
And why am I spending my Saturday on this? Properly, it’s going to be the primary meme IPO. And if this works, different firms could select to spice up the proportion of their shares they allocate to retail traders, says Pitchbook’s Robert Le, a senior analyst. Most IPOs allocate only one p.c to three p.c of their shares to retail traders, he says. If Robinhood ends its first day of buying and selling increased than the place it began, different firms could observe in its footsteps. Nonetheless, if the inventory developments down, institutional traders could keep away from IPOs that embody a big chunk of retail merchants, Le says in an e-mail.
Robinhood hasn’t supplied its traders IPO entry earlier than, and that considerations David Erickson, who was co-head of worldwide fairness capital markets at Barclays till he retired in 2013. (He’s now a lecturer at Wharton Enterprise Faculty on the College of Pennsylvania.) “They don’t have one of the best inside controls,” Erickson says in an interview, pointing to Robinhood’s historical past of outages. “For an organization imagined to be within the enterprise of preserving your cash safe, they aren’t essentially doing job of that.”
Through the roadshow, Tenev, his cofounder Baiju Bhatt — who can also be rocking some lustrous locks — and CFO Jason Warnick seem like in an costly and uncomfortable facsimile of a front room. They’re seated on a white sofa, with random wood slats behind them; vegetation dangle from the slats. In entrance of them, there are small wood tables. Bhatt and Warnick are clearly studying from teleprompters. Many audio system featured on the decision wore a pin of Robinhood’s feather emblem — however not Tenev.
There have been actual, substantive questions finally. Although Robinhood doesn’t give a timeline, it’s apparently engaged on creating wallets for its cryptocurrency customers, permitting them to switch of their crypto from elsewhere. Finally there can be a beta, however as a result of it’s inconceivable to recuperate cryptocurrency if it’s been dealt with incorrect, Robinhood is continuing slowly, Tenev says.
And as for fee for order move, which makes up 81 p.c of the primary quarter income in 2021, Robinhood plans to work with regulators to reply considerations. This sounds suspiciously like Robinhood is planning to foyer — and it might additionally clarify the previous SEC workers employed at Robinhood. As for the indignant meme inventory clients which may go away? Tenev dodges the query. Outages? Properly, Robinhood says it’s investing assets to create redundancies so that they gained’t maintain taking place. (We’ll see!)
Probably the most attention-grabbing remarks are saved for the top. First, Robinhood is contemplating IRAs and Roth IRAs, two sorts of retirement accounts, as merchandise it might supply. (Whether or not individuals wish to save for retirement on their enjoyable playing app is an open query, however certain!) Second, Robinhood thinks that retail traders are available in the market to remain; it’s working to diversify by constructing out Robinhood Gold, its paid product, in addition to money administration, extra cryptocurrency choices and absolutely paid securities lending.
There’s one notable omission within the roadshow. Regardless of its lovey-dovey mission assertion about democratizing finance, the founders’ Class B inventory will get 10 votes per share, whereas IPO traders’ Class A inventory will get only one vote per share. Erickson, the Wharton lecturer, doesn’t like that, both. “This one bothers me like WeWork bothered me,” he says.
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