Everything You Need To Know About the Robinhood IPO

Following a confidential initial public offering (IPO) filing in March, Robinhood, the commission-free investing platform, publicly filed for its IPO with the SEC on July 1. The company will be listed on NASDAQ under the ticker HOOD and expects to raise $100 million in its debut onto the public markets. 

This is one of the most highly anticipated IPOs to date, following the attention the company attracted at the beginning of the year after a group of retail investors used the platform in an attempt to take down some of Wall Street’s top hedge funds, by investing in GameStop (GME). The saga resulted in a further $2.4 billion investment for the company, taking total funding to date to $5.6 billion.

Goldman Sachs has reportedly been hired as the underwriter to lead the Robinhood IPO. 

With so much noise around the company, it can be a little difficult to understand whether this is actually a good investment opportunity. Read on for our analysis.

Key takeaways:

  • Robinhood.com receives significantly more traffic than traditional retail investing platforms
  • Monthly unique visitors (MUVs) are also higher for robinhood.com than its peers
  • Unbounced traffic growth to robinhood.com has dropped since January but remains positive
  • Robinhood users have become less engaged indicated by a drop in time spent on the site in 2Q21

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Robinhood attracts more traffic 

Visits to retail brokerages sites saw sharp growth in 1Q21. In January, when the GameStop saga occurred, visits to retail brokerages spiked dramatically. And this upward trend continued into February, before slowing down slightly in March.

Robinhood has successfully penetrated the retail investing market displayed by its site receiving more traffic than any of the traditional retail brokerages. In both 1Q21 and 2Q21 the site was the only one in the competitive set to receive over 200 million visits. 

Traffic to retail investing sites

Not only does robinhood.com have the most traffic, but it also has the highest number of monthly unique visitors (MUVs).

Monthly unique visitors to retail investing sites (Robinhood leading the pack)

So you can see, robinhood.com is the go-to platform of choice for now. That leaves one looming question: Will Robinhood continue to be the preferred platform? 

The growth picture

A look at the rate of YoY traffic growth is a good indication of continued interest. The graph below shows YoY growth in unbounced traffic (visits that go to more than one page) to robinhood.com in the U.S. Even without the spike in growth (almost 600%) seen in January due to the GameStop saga, robinhood.com was enjoying exceptional levels of growth for much of 2020. 

However the picture has changed since the trading frenzy in January and growth levels have dropped significantly over the course of 1H21. YoY growth in unbounced traffic to robinhood.com in 2Q21 was less than 100%.

YoY Growth

User engagement is dropping

Although unbounced visits to robinhood.com continue to enjoy YoY growth, this growth has dropped significantly in the past 3 months. And we see a similar trend in user engagement with the site. 

The average time spent on robinhood.com, a proxy for user engagement, has dropped in 2Q21. From highs of 12 minute per session seen in January, in June users spent on average 8 minutes per session on the site. Despite the drop, we still consider 8 minutes per session to be an indication of engaged users. 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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