Crypto Trading App Robinhood Expected to Hit $5.6 Billion Valuation with New Funding
Robinhood's valuation is expected to jump fourfold to around $5.6 billion, driven by the stock brokerage app's popularity among millennials.
The company, which features cryptocurrency trades along with stock trades, is in the process of procuring around $350 million from an investor group headed by DST Global, a Russian firm. The team led Robinhood's last funding around one year ago, valuing the business afterward at $1.3 billion, according to The Wall Street Journal.
Robinhood chose not to respond to a request for comment.
Robinhood now ranks among the leading 15 private technology companies in the U.S., as a result of investor confidence that it can gain traction in the financial trading industry.
The company's three-year-old program has gained 4 million users, representing a doubling in 1 year. The gain was driven by an offering of free stock transactions that beat the prices of discount brokers.
Whether the company can gain enough users to support the cost of premium services, such as «gold» subscriptions starting at $6 per month to trade after hours and borrow capital, remains to be seen. The business earns profits on the interest that it holds in client cash accounts and by selling customer trades to market makers.
Robinhood's median age user was about 30, so they have less cash to spend than older customers that big brokerages serve. Robinhood expects its younger investors' assets to grow with time. Eventually, the company expects to offer additional services to its clients. Up to now, the business has restrained investing in marketing in order to reduce its overhead.
Investors also believe there is a chance in the company's debut of cryptocurrency trading, transactions that are commission free.
Investors seeking to earn a fantastic return under the new round of funding are gambling Robinhood can approach E*Trade Financial's valuation.
Vladimir Tenev and Baiju Bhatt, a pair of 20-something Stanford University math graduates when they founded Robinhood in 2012, have said they were motivated to create financial services available to people no matter income by the Occupy Wall Street movement in 2011.