Initial Public Offerings (IPOs) are always a hot ticket, but the thirst for trading new companies in 2021 has never been higher.
To date, U.S. markets have had 640 different companies debut this year. That’s more than five times the number of IPOs by this time last year…
The frenzy is real, and that trend looks to continue next week with Robinhood, the popular stock trading app, set to have its IPO debut on Thursday.
To be honest… there’s a lot about this that makes me laugh.
For starters, the Robinhood IPO valuation is set to go public between $38 and $42 a share — pricing it around $35 billion.
That’s $35 billion for an app that lets you trade all the hot “meme stonks” on your phone — so long as the site doesn’t go down, at least.
And I’m not going to lie to you… its web-based platform sucks.
If you want to laugh even more, all you need to do is look at where the company was in the private market less than a year ago…
Its value was nowhere near what it’s set to go public at. In fact, it’s offering at three times higher than its private market value!
But is there a Robinhood IPO valuation that is a buy? Let’s take a look…
Is the Price Right for the Robinhood IPO Valuation?
Robinhood is supposed to be the platform for the common man, democratizing trading by breaking down barriers and bringing it to the masses, right?
So let’s take a minute and see if it’s possible to stick it to the fat cats and make the Robinhood IPO valuation work for us the way Robin Hood would have wanted.
We’ll start by looking at some recent popular IPOs…
Two big names come to mind: Coinbase Global Inc. (Nasdaq: COIN) and DiDi Global Inc. (NYSE: DIDI). Obviously, Jim Cramer told everyone on CNBC to buy as much DiDi as they could at the offering around $18. Well, that worked out with the stock quickly tanking to $11 a share.
And even though Ark CEO Cathie Wood keeps buying shares of Coinbase, if you look at the chart, it’s staying here on the earth… not going to the moon.
Most importantly, Coinbase is the retail trader’s “favorite platform for crypto.”
And if Robinhood experiences a loss of trading volume like Coinbase, the stock will fall. If there’s legislation on order flow — where Robinhood makes its money — the stock will tank. That puts the Robinhood IPO valuation on pretty shaky ground, if you ask me.
Check out the quick video below and I’ll tell you exactly where the Robinhood IPO valuation needs to be for me to be a buyer. Leave me a comment and let me know if you think Robinhood is ready to steal from the poor and give to the rich, or if you think I’m crazy and that platform’s stock is headed straight up.
As always, you can follow me on social media @lanceippolito on Twitter and Instagram. And don’t forget to subscribe to our YouTube channel if you haven’t already so you can be notified as soon as we post our next video!
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