Robinhood employees and executives
Photo: Nasdaq

Robinhood’s broken IPO echoes Facebook

Protocol Fintech

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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The Big Story

Robinhood pulls a Facebook

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%."

  • Instead, Robinhood shed 8% of its value, ending with a market cap of $29 billion. Compare that to the $35 billion valuation it had sought at the high end of its range.
  • The delay in posting the first trade also suggested that "sell orders [were] outstripping buy orders, putting pressure downward," Diamond said.
  • Even a bold bid to open up the IPO to regular investors didn't seem to help. Robinhood had reserved up to 35% of its shares for its customers, but it's unclear how many of them took part. (Robinhood declined to provide information.)
  • Diamond said the move to let in retail investors could even be seen as a "symptom" of Robinhood's IPO woes if it meant that "savvy institutions were not interested in bailing out the VCs."

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.

  • Facebook and Robinhood also shared "a similar story in terms of the involvement of retail investors," whom Team Zuckerberg also wooed aggressively, said David Keller, chief market strategist of — though Facebook didn't make IPO shares directly available.
  • Facebook's IPO was also underwhelming. The stock, which was also priced at $38, closed with a gain of 23 cents on its first day, before plunging over the next four months amid questions about Facebook's ability to monetize its mobile user base.
  • Facebook eventually dispelled these doubts, emerging as a technology powerhouse. Keller said he could see a similar outcome for Robinhood if the company can "navigate regulatory challenges."
  • Those make up a long list for Robinhood, from worries about the future of payment for order flow to the allegations that Robinhood is treating stock trading like a game — a dangerous game for inexperienced investors.

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


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From Protocol | Fintech

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Surprise: Robinhood's CEO isn't a registered broker. Wall Street regulators are asking why.


  • "You even have some in the House that sit not too far from me on the House Financial Services Committee that would call blockchain basically a financial 9/11."Rep. Ted Budd, member of the House Financial Services committee and the Congressional Blockchain Caucus.
  • "Roles have been eliminated, but we have also created new roles. For example, we have reduced our dependency on our mainframe. But we have introduced Google Cloud, so now we have engineers learning Google Cloud architecture and security." Amy Brady, KeyBank's chief information officer, talking about retraining workers for new technology jobs at the bank.
  • "There are so many better ways to borrow money: a credit card, a bank or credit union loan, family, a relief society. It's time for Congress to extend to all Americans the protections that they gave to the military that have worked so well, and set reasonable loan rates of 36% or less that will provide those who need credit a true helping hand and loans that they have the chance to pay off successfully." Hollister Petraeus, former assistant director for servicemember affairs for the Consumer Financial Protection Bureau, at a Senate hearing on installing a 36% national interest rate cap.

Need to Know

  • Alipay partners with Canada's Nuvei for international e-wallet payments. The deal will enable Alipay customers in China and other e-wallet users in Asia (1.2 billion in total) to connect with Nuvei merchants using Alipay+ cross border payments technology.
  • Early Warning's Zelle keeps growing. Zelle's peer-to-peer payment network saw $120 billion across 436 million transactions in the second quarter, with payment transactions up 58% and values up 68%.
  • Marqeta will power the Google Pay card. It enables people to spend their Google Pay balances via a virtual card in Google's mobile wallet. Users already could use their balance for peer-to-peer payments or to transfer funds to their bank account, but previously could only spend on Google properties like the Play store or YouTube.
  • Big banks focus on lending to the wealthy. The wealth management arms of the four big U.S. banks loaned more than $600 billion in the second quarter.
  • Visa launches "buy now, pay later" APIs. The service enables credit-card issuers to build their own installment pay plans.

Deal Flow

  • Lithic is valued at $800 million. The payments technology startup, formerly known as, raised $60 million led by Stripes.
  • Airwallex is raising a $200 million fund. The payments company wants to invest in startups building on its technology.
  • Prime Trust grabs $64 million. The fintech API provider's series A was led by Mercato Partners.
  • La Haus raises $50 million. The real-estate marketplace operating in Mexico and Colombia was backed by Acrew Capital and Renegade Partners.

3 Questions With...

Nick Molnar, CEO, Afterpay

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.

Learn more

Data Point


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.

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