Robinhood, at the heart of retail trading frenzy, files for own IPO

Robinhood Markets Inc, the online brokerage at the center of the historic retail trading frenzy that gripped Wall Street this year, has confidentially submitted plans to regulators for a US initial public offering, the company disclosed on Tuesday.

The move to push ahead with a stock market flotation comes in the middle of a historic boom in US capital markets, fueled largely by dealmaking through so-called special purpose acquisition companies.

Companies have raised well over $100 billion through initial public offerings (IPOs) in the first three months of the year and are poised to overtake 2020's record haul of $167 billion, data from Refinitiv and Dealogic showed. The amount raised includes blank-check IPOs.

Reuters reported in December that Robinhood had picked Goldman Sachs Group Inc to lead preparations for a stock market flotation.

The company is yet to determine the number of shares to be offered and the price range, it said in a blog post.

Robinhood had considered going public through a direct listing in the weeks leading up to the filing, people familiar with the matter said.

In a direct listing, a company does not sell any shares in advance of its market debut, as is the case with IPOs.

Menlo Park, California-based Robinhood was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. The company's platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies.

The platform's easy-to-use interface has made it a go-to for young investors trading from home during coronavirus-induced restrictions and its popularity soared during the retail trading frenzy.

The company, however, faced criticism after it was forced to curb trading in certain stocks during the social-media fueled trading frenzy due to a 10-fold rise in deposit requirements at its clearinghouse.

It was forced to raise a whopping $3.4 billion in emergency funds after its finances were strained due to the massive jump in retail trading.

The funding rounds were led by Ribbit Capital and included existing investors ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates. The latest financing valued Robinhood at around $30 billion, according to people familiar with matter.

Robinhood is currently being probed by US regulators over its temporary trading curbs on the so-called "meme stocks". The company has set aside $26.6 million for a potential settlement around trading outages in March 2020, as well as its options trading policies. 

-reuters-

What’s a Palantir? Tech industry’s next big IPO

About a month before he became president, Donald Trump met with the leaders of the country’s top technology companies at Trump Tower in Manhattan.

The meeting included the chief executives of Amazon, Apple, Google, Microsoft and other household names like Tesla and Oracle. And then there was Alex Karp, chief executive of a company, called Palantir Technologies, that few outside Silicon Valley and government circles had heard of.

Palantir, the only privately held company represented in the room, had become a major player among government contractors. And, indicative of its growing prominence, one of its founders, venture capitalist Peter Thiel, had supported Trump during the 2016 election and had helped set up the meeting.

Now, as Palantir prepares to go public in what could be the largest stock market listing of a tech startup since Uber last year, many are wondering: What exactly does this influential but little-known company do?

Offering software — and, crucially, teams of engineers that customize the software — Palantir helps organizations make sense of vast amounts of data. It helps gather information from various sources like internet traffic and cellphone records and analyzes that information. It puts those disparate pieces together into something that makes sense to its users, like a visual display.

But it can take plenty of engineers and plenty of time to make Palantir’s technology work the way customers need it to. And that mix of technology and human muscle may lead to some confusion on Wall Street about how to value the company. Is Palantir a software company, which is traditionally a very profitable business, or is it a less-profitable consulting firm? Or is it both?

“For investors, it is a bit of a Rubik’s Cube,” said Daniel Ives, managing director of equity research at Wedbush Securities.

Palantir, which was founded in 2003, has long described its technology as ideal for tracking terrorists, often embracing an unconfirmed rumor that it helped locate Osama bin Laden. The name Palantir is a nod to spherical objects used in the “Lord of the Rings” books to see other parts of fictional Middle-earth.

Funded in part by In-Q-Tel, the investment arm of the Central Intelligence Agency, the company built its flagship software technology, Gotham, with an eye toward use inside the CIA.

Palantir’s technologies can also help track the spread of the coronavirus, as it is now doing for the Centers for Disease Control and Prevention. And they can help find immigrants living in the country without legal permission, which is how Immigration and Customs Enforcement, under orders from the White House, is using these technologies, according to recently released federal documents.

The company is deeply wedded to its work inside the government. Although some Palantir employees have protested its work with ICE and other parts of the government, it has not backed off.

In a letter to potential investors, included in a filing with the Securities and Exchange Commission Tuesday, Karp pointedly jabbed at fellow Silicon Valley companies and said he was proud of Palantir’s work with federal agencies.

“Our company was founded in Silicon Valley. But we seem to share fewer and fewer of the technology sector’s values and commitments,” he wrote. He added that “software projects with our nation’s defense and intelligence agencies, whose missions are to keep us safe, have become controversial, while companies built on advertising dollars are commonplace.”

The New York Times