“What’s your favourite planet?” is an actual query that Robinhood execs actually picked to reply throughout the Q&A piece of its retail investor roadshow.
“Positively Pluto,” says long-haired CEO Vlad Tenev. He’s having a great time. He goes on to clarify that there might be an excellent view of Venus tonight after sundown.
Most of the questions the administration picked have been lackluster; requested if Robinhood will add a buyer assist line, Tenev cheerily explains there already is one. One other query is wasted on whether or not the inventory can pay dividends — anybody who learn the prospectus is aware of the reply isn’t any.
I’m watching this roadshow — my first, and the primary, I think, 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 prime of the presentation, I’m instructed that that is mainly the identical set of supplies institutional traders get.
And why am I spending my Saturday on this? Effectively, 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 % to three % of their shares to retail traders, he says. If Robinhood ends its first day of buying and selling larger than the place it began, different firms could comply with in its footsteps. Nevertheless, if the inventory traits down, institutional traders could avoid IPOs that embrace a big chunk of retail merchants, Le says in an e mail.
Robinhood hasn’t provided its traders IPO entry earlier than, and that issues David Erickson, who was co-head of world fairness capital markets at Barclays till he retired in 2013. (He’s now a lecturer at Wharton Enterprise College on the College of Pennsylvania.) “They don’t have the most effective inside controls,” Erickson says in an interview, pointing to Robinhood’s historical past of outages. “For a corporation presupposed to be within the enterprise of conserving your cash safe, they aren’t essentially doing a great job of that.”
Throughout the roadshow, Tenev, his cofounder Baiju Bhatt — who can also be rocking some lustrous locks — and CFO Jason Warnick look 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 ultimately. 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 might be a beta, however as a result of it’s unimaginable to recuperate cryptocurrency if it’s been dealt with mistaken, Robinhood is continuing slowly, Tenev says.
And as for fee for order circulation, which makes up 81 % of the primary quarter income in 2021, Robinhood plans to work with regulators to reply issues. This sounds suspiciously like Robinhood is planning to foyer — and it might additionally clarify the previous SEC staff employed at Robinhood. As for the offended meme inventory prospects that may go away? Tenev dodges the query. Outages? Effectively, Robinhood says it’s investing assets to create redundancies in order that they gained’t preserve occurring. (We’ll see!)
Essentially the most fascinating remarks are saved for the tip. First, Robinhood is contemplating IRAs and Roth IRAs, two sorts of retirement accounts, as merchandise it might supply. (Whether or not individuals need to save for retirement on their enjoyable playing app is an open query, however positive!) Second, Robinhood thinks that retail traders are out there 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.