Robinhood IPO

Dear Reader,

Robinhood, the no fees brokerage company, is planning an IPO.

Private markets value Robinhood markets at 40 billion USD.

Robinhood's IPO prospect records the following stats:

For the year ended December 31, 2020, as compared to the year ended December 31, 2019:

•our total revenue grew 245% to $959 million, up from $278 million;

•we recorded net income of $7 million, compared to a net loss of $107 million; and

•our Adjusted EBITDA was $155 million, compared to negative $74 million.

In addition, for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020:

•our total revenue grew 309% to $522 million, up from $128 million;

•we recorded net loss of $1.4 billion, which included a $1.5 billion fair value adjustment to our convertible notes and warrant liability, compared to a net loss of $53 million; and

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•our Adjusted EBITDA was $115 million, compared to negative $47 million.

I personally think Robinhood markets is worth 20 billion USD, and this is predicated on Robinhood becoming a sustainably profitable company in the future.

Basically, Robinhood's main clients traders are millennials with low volume accounts of around 3 500 USD on average and a large cryptocurrency trading offering. When the stock market turns, the obvious technology stocks bubble bursts, Robinhood's clients will be hurt the most.

If Robinhood is not consistently profitable by then and does not have a large cash cushion, Robinhood's existence as a going concern might be in threat i.e. bankruptcy could threaten Robinhood in the case of a stock market crash. Robinhood's clients trade a lot of stock options and stocks on margin. Given the inherent risks in options and stocks traded on margin, the settlement risk and the size of Robinhood's business, a 50 % S&P 500, DJIA or Nasdaq Composite stock market crash could threaten not only Robinhood, but to a large extent the entire US and by default global financial system.

In short, according to my estimates, Robinhood is worth around 20 billion USD, if it becomes profitable.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich