Retail brokerage app Robinhood, which fuelled a “meme stock” frenzy earlier this year, makes its market debut on July 29 when it will list on Nasdaq in perhaps one of the most closely watched listings in recent times.
The popular American online brokerage, which claims to have 22.5 million users and sold its shares in its initial public offering at $38 apiece, raised $2.1 billion, reports have said. The company has been valued at $32 billion.
Vinay Bharathwaj, co-founder and co-CEO, Stockal, says Indian investors, who have shown keen interest in public offers of tech companies, cannot seamlessly participate in American IPOs but those looking to invest in Robinhood can do so once it gets listed by opening an international trading account with Stockal.
Stockal is a global investment platform that enables investments in a diverse set of assets from a single account from anywhere in the world. Founded by Sitashwa Srivastava and Vinay Bharathwaj is based out of NYC with the development center in Bangalore.
In an interview to Moneycontrol's Kshitij Anand, Bharathwaj says Indians are investing in the US equities heavily through platforms like Stockal, and thematic ETFs have been the next big investment avenue. Edited excerpts:
As Zomato and Paytm are making headlines here in India, Robinhood is making waves in the US. How are Indian investors reacting to Robinhood IPO?
In terms of valuation, Robinhood (HOOD) is the fifth-largest IPO of 2021 in the US and surely there will be a demand as Indian investors have been increasingly bullish about high-growth tech companies.
Robinhood has enjoyed a prosperous period in the wake of the Covid-19 pandemic, with as many as 20 million monthly active users arriving on an average in January and February 2021.
Though the platform has had a largely controversial start to 2021 following the fallout of the GameStop short squeeze in late January and the penalties and compensation that Robinhood had to pay—it would be interesting to see how investors will look at this offering.
How can Indian investors be part of the Robinhood story or other American IPOs? Do they have to put the entire amount or fractional shares are available as well?
At the moment Indian investors cannot seamlessly participate in the US IPOs. However, those looking to invest in Robinhood, can do so once it gets listed, by opening a trading account with Stockal.
In the recent past, we have witnessed lots of traction and transactions post the slew of IPOs becoming a part of the US stock market.
DoorDash and Airbnb with their multi-billion dollar initial public offerings (IPOs) in December 2020 certainly set the ball rolling big time, which was followed up with the likes of Coinbase and now Robinhood.
Seeing the interest from India to participate in US IPOs, we are working actively to bring the same to Indian investors very soon on our platform.
Also read: Robinhood reveals breakneck growth, legal pitfalls in IPO filing
Robinhood is a profit-making company unlike Zomato or Paytm, which are still incurring losses. With a price band of $38-$42, some experts didn’t found the price similar to what we see in India. Any recent startup IPOs that hit NYSE and made it big amid retail frenzy?
DoorDash! The recent IPO made it big on the US exchanges with over 90 percent listing gains. DoorDash, incidentally, is in the same line of business as Zomato and Swiggy and happens to be five times bigger than the Indian players in terms of order values.
The other hotshot IPOs in the recent past were those of Coinbase and Airbnb, which were caught up in the retail frenzy, leading to some huge listing gains.
However, Robinhood remains the most talked-about IPO in 2021, as it’s the epicentre of this huge retail-investing wave, which started ever since the pandemic.
Indians can actively buy into these stocks once they are available on our platform post the listing.
We are in a bull market currently, where both S&P 500 and Nasdaq indexes have outperformed global and emerging equities with over 15 percent YTD gains in 2021 and this trend is likely to continue for the next half of the year as we see increased participation in such IPOs.
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Will Robinhood be among the top 20 companies of the world after the listing?
Robinhood is to be valued at $35-$40 billion post its listing. It is one of the largest IPOs of 2021 on the US markets. The US financial markets are one of the greatest sources of wealth creation in the world.
The IPO will pave the way for investors to have better access, more useful tools, and help democratise finance for all.
By setting aside almost 35 percent of its shares in the IPO for sale, it might just be one of the largest retail allocations ever.
Which are the other avenues/asset classes in which Indians are investing money in 2021? How has the ETF segment grown for you on a YoY basis?
Indians are investing in the US equities heavily through global platforms like Stockal, and thematic ETFs have been the next big investment avenues among Indian investors.
Some of the most popular ETFs on our platform include ETFs with themes focusing on artificial intelligence, blockchain, renewable energies, electric vehicles or index ETFs.
At Stockal, we have seen about 18-20 percent of investments happening in these ETFs. Apart from this, we also have Stockal’s Curated Portfolios (Stacks) with has given over 20-30 percent CAGR, which are a big hit among Indian investors.
Stacks are curated portfolios structured based on either sectors or themes, which can be invested for as low as $100. These stacks are researched and curated by experienced global professionals with vast industry knowledge.
What is unique about Robinhood’s IPO?
Typically, nearly all shares of a company aren’t available to individual investors before they start trading and the bulk of shares in an initial public offering are given to institutions.
Recently, firms such as Robinhood and SoFi have started to offer IPOs at the offering price to their customers as part of their mission to make markets accessible.
The offering price of an IPO is the price at which a company like Robinhood makes its shares available to investors before trading.
The opening price is the price at which a company begins trading, which could immediately jump, stagnate or plummet, depending on how the market values the company.
In its S-1 filing, Robinhood took the bold step to reserve between 20 percent to 35 percent of its shares to be available to its customers through the company’s new IPO Access feature.
This can present itself as an opportunity for retail investors to involve themselves in stocks at an earlier stage, however, there’s a potential downside. Buying shares at the IPO stage can be much riskier than investing in an established company.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.