Robinhood Files For IPO Showing Cofounders Tenev And Bhatt Stand To Make Billions

Robinhood, the mobile app that pioneered commission-free stock trades, filed for its hotly anticipated initial public offering on Thursday afternoon, divulging $959 million in revenue for 2020 as retail trading boomed—up 245% from 2019. 

The S-1 filing also disclosed an incentive-laden restricted stock award plan that could earn cofounders Vlad Tenev, 34, and Baiju Bhatt, 36, billions of dollars in coming years. In late May, Robinhood’s board approved awards of 22,200,000 and 13,320,000 restricted stock awards to Tenev and Bhatt, respectively, which will vest over eight years after its IPO depending on how the company’s stock performs.

If Tenev and Bhatt achieve each of the price-based stock milestones, which range from Robinhood reaching $120 a share to $300 a share, the total award could be worth over $7.5 billion. Tenev stands to make about $4.7 billion, while Bhatt stands to make over $2.8 billion.

Tenev and Bhatt, who met as undergraduates at Stanford University in 2005, are already billionaires. They first appeared on the Forbes billionaires list last year, when the app was valued at more than $11 billion in an August 2020 funding round. (Each cofounder owns an estimated 10% stake in the company, giving them a net worth of $1 billion, respectively, according to Forbes’ estimates. Robinhood’s S-1 filing did not disclose details on its ownership structure.)

Another nugget Robinhood’s IPO filing is the disclosure of a sweeping investigation into trading restrictions it put in place amid a surge in meme stock trading in early 2021.

According to its S-1, CEO Tenev and others at the company have received requests for information and subpoenas related to trading restrictions it put on stocks like video game retailer GameStop and movie theater chain AMC Entertainment. Those inquiries came from the United States Attorney’s Office for the Northern District of California, the U.S. Department of Justice, the SEC, FINRA, the New York Attorney General’s Office and other state attorneys general offices. Robinhood said in its prospectus, “a related search warrant was executed by the USAO to obtain Mr. Tenev’s cell phone.”

The investigations highlight how Robinhood’s IPO and surging valuation comes at a time of both rapid growth and deep problems for the company.

Since the onset of the Coronavirus pandemic, Robinhood’s business has grown almost exponentially, bringing its active users to a staggering 18 million as hidebound millennials took to the app to trade stocks and options for free during quarantine. Robinhood’s valuation has ballooned in lockstep with the trading surge via several funding rounds, with the company raising a total of $5.6 billion year-to-date, according to Crunchbase. Secondary share offerings in February, ahead of its IPO, have now given the company a valuation of as much as $40 billion.