Robinhood App Eyes IPO As Free Trading Expansion Fuels Hot Growth, Valuation – Investor's Business Daily

Robinhood app is gearing to go public. The fintech startup shook up E-Trade (ETFC) and other online brokers with its free stock trading model, but faces challenges ahead as JPMorgan Chase (JPM) enters the free investing space.

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CNBC quoted Robinhood CEO Baiju Bhatt saying Thursday at the TechCrunch Disrupt conference in San Francisco that his company is “thinking about” going public. He said that is likely to happen in the medium to long term, not soon.

The online brokerage is on the hunt for a chief financial officer as it looks to an initial public offering (IPO). U.S. regulators are auditing Robinhood as part of the process.

The Robinhood app for free stock and ETF trading launched three years ago. It now boasts 5 million brokerage accounts vs. 4 million in May, which itself marked a doubling in the past year.

Robinhood outstripped E-Trade in number of users earlier this year, but not all of its accounts are funded. The average age of Robinhood app users is 28, with many drawn to its newer products for free crypto trading and free options trading.

The brokerage does not disclose total assets under management, average account size or typical starting balance. But after its latest funding round, Robinhood is valued at $5.6 billion, up from an estimated $1.3 billion last year.

Its rapid growth follows expansion into trading on margin with a premium subscription product called Robinhood Gold. It’s also moved into trading Bitcoin and cryptocurrencies with Robinhood Crypto. Most recently it began offering foreign stocks such as Tencent Holdings (TCEHY) on its mobile investing platform.

Shares of E-Trade eked out a 0.3% gain in early Friday stock market trading after plunging below the 200-day moving average in massive volume Thursday. TD Ameritrade (AMTD), Charles Schwab (SCHW) and Interactive Brokers (IBKR) climbed 0.5%, 1.4% and 1.6%, respectively. JPMorgan, which is launching its own free-trading app, dipped 0.1% as it eyes a 119.43 buy point.

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