Robinhood Valuation Soars To $11.2 Billion With New Funding And Record Growth

TOPLINE

Robinhood on Monday announced yet another new round of funding—its third major cash injection in the last four months—at a valuation of $11.2 billion, amid record numbers of new customers and speculation that the company could IPO later this year.

The popular stock trading app’s valuation jumped from $8.6 billion to $11.2 billion.

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KEY FACTS

The trading start-up announced a fresh $200 million, Series G funding round from New York-based D1 Capital Partners, boosting its valuation by almost $3 billion.

The 7-year-old investing app was most recently valued at $8.6 billion in its latest funding round in July, when it raised $320 million.

The latest investment comes amid a period of record growth for Robinhood, which has thrived during the coronavirus pandemic as multitudes of younger investors have jumped into the stock market.

The company added 3 million new customer accounts in the beginning of 2020 and most recently said that it saw 4.3 million daily average revenue trades (DARTs) in June, outperforming all of the other publicly traded brokers.

Amid the trading boom and surge of new retail investors, Robinhood roughly doubled the amount of money it makes from customer trades last quarter, according to recent SEC filings.

Founders Vladimir Tenev and Baiju Bhatt, who started the company in 2013, have long pledged to take it public, but while there is rising speculation that it could IPO later this year, Robinhood is yet to provide any specific plans for doing so.

Big number

With the latest $200 million investment, Robinhood has now raised a total of $1.7 billion, according to Crunchbase.

Crucial quote

“With this funding, we’ll continue to invest in improving our core product and customer experience,” Robinhood said in its press release.

Tangent

D1 Partners joins a list of other high-profile Robinhood investors, including the Sequoia fund, Kleiner Perkins and Google’s venture capital arm, GV.

What to watch for

Robinhood’s success during the coronavirus pandemic has also been met with criticism on Wall Street. The company currently faces more than a dozen lawsuits after its platform went down for two whole days in March, leaving customers locked out of accounts on a historic day for the markets. What’s more, there are concerns that the company caters too much to younger users who don’t necessarily understand the dangers of high-risk trading, especially around options. One of Robinhood’s inexperienced young options traders, a 20-year old college student from Illinois named Alex Kearns, died by suicide in June after he mistakenly thought he owed Robinhood more than $730,000 because his account hadn’t yet reflected the settled trades in his account. Two days later, Robinhood’s founders released a statement pledging to tighten eligibility criteria, educational resources and upgrades to its user interface for customers trading options.