Robinhood Gets $32B Valuation As It Prices IPO At Lower End Of Range — Lack Of Investor Interest Or A 'Conscious Decision?'

Robinhood Markets Inc HOOD priced its initial public offering at the lower end of the indicated range on Wednesday.

What Happened: The trading platform is pricing 55 million shares in the IPO at $38 each, which is at the lower end of the $38 to $42 range disclosed earlier in a prospectus filed with the U.S. Securities and Exchange Commission.

The IPO has a greenshoe option that allows underwriters to purchase an additional 5.5 million shares at the offering price.

If the overallotment option is fully exercised, Robinhood could raise as much as $2.3 billion in the IPO. Shares are expected to begin trading on the Nasdaq on Thursday, under the symbol “HOOD.” 

Goldman Sachs Group, Inc GS unit Goldman Sachs & Co. LLC, JPMorgan Chase & Co. JPM are the lead book-runners for the offering. Additional book-runners include Barclays Plc BCS,  Citigroup Inc C, and Wells Fargo & Company WFC subsidiary Wells Fargo Securities.

Why It Matters: The IPO prices Robinhood, a trading platform favored by retail investors, at $32 billion on a non-diluted basis. The Vladimir Tenev-led company has set aside between 20% and 35% of its IPO shares for such investors who are its app users. 

Robinhood anticipates about 841.2 million outstanding shares post-IPO if all overallotment options are exercised.

See Also: Robinhood Discloses New Regulatory Probe One Day Before IPO

Even so, some retail investors on Reddit forums are less than enthused by Robinhood’s IPO partly due to occurrences earlier in the year. In January, Robinhood limited trading in GameStop Corp GME and AMC Entertainment Holdings Inc AMC as retail investors conducted a short squeeze.

Trading in Dogecoin DOGE/USD saw similar halts at the height of the meme coin frenzy. 

A viral post on r/Superstonk said, “Robinhood IPO is set to be on the market on Thursday.... DO NOT GO NEAR IT!!!”

“Hood? Their ticker symbol should’ve been ROB,” commented u/nidhaloff on r/WallStreetBets or WSB.

People familiar with the matter told the Wall Street Journal that it isn't just a reflection of investors' hesitation but the lower pricing is also a conscious decision on Robinhood's part — aimed at ensuring a successful first day of trading.

Read Next: Why Robinhood IPO Investors Are Facing 'Alarming Risk'

Photo: Courtesy of Robinhood