Robinhood disclosed that if a decline occurs in the platform’s volume of crypto trading, then there is a chance for the firm’s IPO valuation to be questioned. It further stated that there is an expectation for its revenue to fall in Q3 of 2021 due to relatively lesser trading activity in the crypto market.
The expectation of a collapse in Revenue
As Robinhood sets out for going public in July, it has been revealed by the trading application through an SEC filing which is revised, that a decrease can occur in the revenue of the company during the Q3 of 2021 as compared to that generated during Q2.
As per Robinhood, the firm has undergone a spike regarding trading activity during January as well as February this year. However, it added, the later time, including some weeks of the Q2 (which concluded on 30th June), witnessed a return in the levels similar to the previous periods, and the same position is maintained in the initial period of the Q3. Similarly, the document noted that from the transaction-based revenue of the company during the Q1 of 2021, 17% was collected from the transactions of cryptocurrency. This was a jump from 4%, which was noticed in the Q4 of 2020.
Moreover, over 9.5M consumers traded cryptocurrency valuing more than $88B through the platform of Robinhood during the Q1 of 2021. The organization held up to $12B in the form of crypto assets during March 2021.
An extract within the details section of the document, dealing with the firms anticipations about revenue drop, mentioned that the revenue of the company seems to get lowered in the next three months concluding on 30th September 2021, and it will be comparatively lesser than the previous recent three months closing on 30th June 2021 because of the reduced trading activity, especially regarding cryptocurrency.
$35B to be targeted for IPO
In the meantime, $35B has been aimed as a market valuation of the next IPO by Robinhood. The platform is seeking to sell up to 55M shares out of Class A of its normal stock, within the price range of $38 – $42 to be charged for each share and providing a cumulative collection of $2.3B.