Robinhood reveals breakneck growth, legal pitfalls in IPO filing

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July 1 (Reuters) – Robinhood Markets Inc on Thursday set the stage for its hotly anticipated IPO as it revealed rapid growth in users of its trading app in a filing, while also flagging a swathe of investigations by prosecutors and regulators.

The company, under scrutiny after this year’s trading frenzy for so-called meme stocks such as GameStop (GME.N), is aiming for an IPO valuation of over $40 billion, Reuters has reported.

Robinhood’s IPO filing detailed for the first time how the trading mania, which has swept amateur investors, fueled a four-fold jump in its revenue over January to March, and also how its quick expansion came at a cost.

It reported a net loss of $1.4 billion for the period after borrowing $3.5 billion via convertible bonds to backstop the wave of trading orders amid the rally in a few stocks, which had been shorted by hedge funds and championed by individual investors in online chatrooms including Reddit’s WallStreetBets.

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