Robinhood Costs Its I.P.O. at $38 a Share

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SAN FRANCISCO – Robinhood is known for its association with “meme stocks”. Now the stock trading app could become one.

On Wednesday, Robinhood valued its initial public offering at $ 38 per share, according to two people who knew about the deal, and valued the company at $ 31.7 billion. It raised $ 2.1 Billions from the offer, paving the way for the company to start trading on Thursday under the symbol HOOD.

The price was on the lower end of Robinhood’s original $ 38 to $ 42 range, indicating mediocre interest in the stock.

Robinhood’s IPO is being watched closely, even in the busiest year for public listings since the dot-com bubble in 2000. The company’s role in facilitating stock trading, its mission to turn Wall Street upside down, and the number of the most recent Controversy has made his offer a symbol of the disruption in Silicon Valley and the challenges that come with it. It has also been closely identified with driving the roller coaster trading of “meme stocks” like GameStop and AMC Entertainment that year.

Robinhood, which has announced that it wants to democratize the financial sector, has also sold a large part of its offering directly to its users through its app. That will test whether his customers are holding onto the stock or are quick to throw it away. Robinhood angered customers when it stopped certain trades in January, causing some to flip or bet against the company’s shares when it was listed.

Because of this, Robinhood’s bankers expect early trading in the stock to be more volatile than other IPOs.

The company has also faced multiple legal proceedings and regulatory inquiries related to its business. A filing on Tuesday said the financial industry regulator is investigating its founders’ compliance with registration requirements.

This followed a $ 70 million fine Robinhood paid FINRA in July for misleading customers and causing them harm in the event of outages. Last year, the company also paid $ 65 million to the Securities and Exchange Commission for misleading customers.

Over the weekend, Robinhood founders, Vlad Tenev and Baiju Bhatt, moderated a public version of their client investor presentation asking questions about regulations and their business model. Mr. Tenev marveled at Robinhood’s rapid growth but also noted that it “has created some real challenges”.

The Wall Street Journal previously reported on Robinhood’s stock price.