The moment that some of you have been waiting for is here — Robinhood’s S-1 filing to go public has been revealed, laying bare the kind of secrets you only learn when a company is legally obligated to reveal them. Only one day ago, the company agreed to pay a record-breaking $70 million fine “for systemic supervisory failures and significant harm suffered by millions of customers,” and now its paperwork touts a commitment to “maintaining strong relationships with our loyal customer base and earning our customers’ trust when they choose our platform on their financial journeys.”
So what does the much-anticipated document include? There’s a note that the United States Attorney’s Office for the Northern District of California has executed a search warrant for co-founder and CEO Vladimir Tenev’s phone as well as information about a recent Securities and Exchange Commission Enforcement Division inquiry into Robinhood’s “For You” feature.
According to Robinhood, some 1,600 jointly represented customers “may pursue arbitration of individual claims against us arising out of the March 2020 Outages, in addition to other alleged system outages.”
GameStop is mentioned five times in the document (usually along with AMC and other popular Reddit stonks), mostly in describing Robinhood’s decision to limit trading this spring. There have been about 50 class action lawsuits filed over the incident as well as investigations or inquiries from the USAO, DOJ, SEC, FINRA, and any other combination of letters you can imagine.
Memes are inextricably a part of Robinhood’s business, as it notes that in the first three months of 2021, “34 percent of our cryptocurrency transaction-based revenue was attributable to transactions in Dogecoin.” At the same time, revenue from cryptocurrency transactions went from 4 percent for the last three months of 2020 to 12 percent of its total revenue in the first three months of 2021.
Robinhood (HOOD) says it has about 17.7 million monthly active users, about $80 billion in assets under management and despite the spike in activity, it lost nearly $1.5 billion in the first three months of 2021. Its S-1 filing also addressed the recent removal of a confetti celebration effect in the app, saying, “This practice drew scrutiny from certain regulators and the media and, in 2021, we introduced new unique visual experiences to mark milestones in our customers’ financial journeys.”