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Robinhood’s broken IPO echoes Facebook

Hello and welcome to Protocol | Fintech! This Friday: Robinhood's broken IPO, who's calling blockchain "a financial 9/11," and why Afterpay's CEO is watching crypto.
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Robinhood's debut badly missed the mark.
On Wednesday, it priced its shares at the bottom of the range, already a sign of weaker-than-expected demand. The start of trading was slow — another signal of possible trouble. After the briefest, smallest pop over the IPO price of $38, shares tumbled as much as 11%.
It was a disappointing IPO for a trailblazing startup that kicked Wall Street's doors wide open for retail investors, but ended up getting smacked by traders on its first day as a public company.
Robinhood's IPO drew comparisons with another high-profile tech company whose much-anticipated trading debut a decade ago was also a failure on its first day: Facebook. Now worth a cool trillion dollars, Facebook left its rocky Wall Street entrance behind years ago.
Now, the question is: Will Robinhood track Facebook's roller coaster? Or does the weak offering reflect real roadblocks to its rise as a tech titan?
By the standard definition, Robinhood's was "a broken IPO." That's how Santa Clara University's Stephen Diamond, a veteran corporate governance expert, described the debut, noting that a successful IPO would lead to "a first day pop of 10% to 20%."
The echoes of Facebook are compelling, and worth considering. Like Robinhood, Facebook's 2012 IPO also drew a lot of attention, in part because it was a rapidly growing social network and in part because employees and investors had been agitating for an exit for years.
Will the Robinhood story follow the Facebook script? Zuckerberg went to war to fix Facebook's mobile woes. Robinhood will have to do something like that to make the transition from hot startup to tech powerhouse. "Upside for HOOD has to come from confidence in their business model and their ability to navigate regulatory challenges," Keller said. "So far, investors are suggesting that it may be a rocky road."
- Ben Pimentel
Micron innovations, like the world's most advanced 1α DRAM and 176-layer 3D NAND tech, deliver the data foundation that enables businesses to turn data into insight and gain a competitive edge.
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Waiting for the digital dollar. The CEO of the Electronic Transactions Association explained why payments companies are excited and worried about a central bank digital currency for the U.S.
Surprise: Robinhood's CEO isn't a registered broker. Wall Street regulators are asking why.
What fintech trend is most encouraging for you?
There's actually a very positive change happening, which started prior to COVID and has accelerated through the pandemic. Financial wellness and budgeting is a massive trend, with the world shifting from the credit economy to the debit economy as young people are increasingly adverse to interest, fees and getting trapped in revolving debt. 90% of our global transactions are made with debit cards, and it's not just us. In its last earnings report, Visa announced that their debit transactions were up 26% globally, while credit was only up 2%.
What's been your biggest professional blunder, and how did it help you?
When we launched Afterpay, we did not take into account how much we were disrupting an established financial sector. We needed to invest adequate time in educating the public. By missing this key step, we faced some initial misunderstandings and misconceptions about our business model.
We learned we have to continuously educate people about why we founded Afterpay and the benefits to our customers. To us, it was simple; we wanted to provide a new way for customers to budget their money to buy what they want in a responsible way.
What fintech company — besides your own — have you been most impressed with this past year?
We're watching cryptocurrencies very closely. The bigger picture is exactly what our business is all about. Money is being completely re-imagined, and the popularity of crypto reflects young people's desire to get rid of the middleman — control their own money and their own financial destiny. Similarly, our services give people control of their most important asset — their money to pay better and ultimately live better.
Micron innovations, like the world's most advanced 1α DRAM and 176-layer 3D NAND tech, deliver the data foundation that enables businesses to turn data into insight and gain a competitive edge.
That's the rise in ether's trading volume in the first half of 2021. Transactions in the second-largest cryptocurrency rose to $1.4 trillion as institutions jumped in.
Thanks for reading — see you Tuesday!
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