C_NCENTRATE #575: Instagram future, Millennial industries, audio huddles, nuggets and more!
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ROBINHOOD GETS LANDMARK FINE, FILES FOR IPO, OCEAN IS ON FIRE
NOTE: Mouthwash Season Two begins on Monday! The theme is all about power, and first up is leading Space Analyst Laura Forczyk. Tune-in live on Twitter Spaces 8pm BST / 3pm EST / 12pm PST. Find out more here or click the image to be reminded!
You’d think the maddest thing you’d see this week is the actual ocean on fire thanks to a burst pipe, but no. Robinhood, the app that gamifies investing, is floating for IPO later this year after getting a huge fine. Ballsy, you might say, or foolish, but it’s almost a now or never scenario. The core business is simple; payment for order flow, a controversial practice that means brokers sell customer trades to marker makers who promise to execute the trade at current, or better, market prices.
Data you have to release when filing for IPO shows some interesting things; people are trading larger and larger amounts, more often and customers are making more money as a result (up 65% you). If customers win, Robinhood wins, and if customers don’t win, Robinhood still makes money. The app’s recent PR battles (losing $1.4bn with the Gamestop debacle) have brought Robinhood into the spotlight and many wonder whether the pandemic stimulus checks aren’t propping up the app to begin with. We’re about to find out.
Crypto is an interesting part of the puzzle, accounting now for 17% of revenue; last year it was just 4%, another issue many are struggling with. FIRA just handed Robinhood their biggest fine ever - $70m - for causing “widespread and significant harm” to customers over the last five years. Redditors are even pledging to avoid the IPO:
"Why would anyone frequenting this sub even be thinking about the IPO, let alone wanting to throw away money shorting it,. "Just forget Robinhood altogether. Let them go down in lawsuits and loss of customer base."
With +50 lawsuits at the time of filing, Robinhood may not be destined for greatness. Banned in the UK and Canada, plus an SEC review happening, the future of Robinhood may have its wings clipped before they unfurl. As Barron’s succinctly puts it; Robinhood rode the meme-stock wave, but that might not be enough for its IPO.
SO WHAT?
__ DO __ Expect the crypto crowd to push for (and against) Robinhood. In one way, the app legitimises crypto, and in another Robinhood paints a target on crypto’s back. // __ DON'T __ Expect the SEC to roll over, and if that happens, Robinhood will have a huge chunk of change gone. BAU would likely be impossible. If Reddit’s going against you, you know you’ve got some issues to work out.
THIS ISSUE OF C_NCENTRATE IS FREE THANKS TO WAYDEV
Waydev helps software engineering leaders gain complete visibility of their teams with a data-driven story of key business initiatives.
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