SAN DIEGO–(BUSINESS WIRE)–$HOOD #IPO–Shareholder rights law firm Robbins LLP informs investors that a class action was filed on behalf of all persons and entities that purchased Robinhood Markets, Inc. (NASDAQ: HOOD) pursuant to the Company’s July initial public offering (“IPO”). The complaint alleges violations of the Securities Act of 1933. Robinhood is a financial services company known for pioneering commission-free trades of stocks, exchange-traded funds (“ETFs”) and cryptocurrencies via a mobile app.
If you suffered a loss due to Robinhood Markets, Inc.’s misconduct, click here.
Robinhood Markets, Inc. (HOOD) Made Material Misstatements in its Offering Documents in Support of its IPO
According to the complaint, Robinhood conducted its IPO on July 30, 2021, offering 55 million shares at $38 per share. According to the Offering Documents supporting the IPO, Robinhood’s significant growth technology, and commitment to providing users a highly accessible and safe trading experience is what “sets [it] apart” from others in the financial services ecosystem. The Offering Documents also touted Robinhood’s growth, including the increase in the Company’s transaction-based revenue in the lead up to the IPO.
However, the Offering Documents were misleading because at the time of the offering, Robinhood’s revenue growth was experiencing a major reversal, with transaction-based revenues from cryptocurrency trading serving only as a short-term, transitory injection, effectively masking what was stagnating growth. Further, the Company’s “significant investments designed to enhance the reliability and scalability of [its] platform” were patently inadequate and/or defective, which exposed the platform to worsening service-level disruptions and security breaches, particularly as the Company scaled its services to a larger user base.
On October 26, 2021, Robinhood reported its third quarter 2021 results, revealing that it had missed analyst estimates by nearly $73 million and experienced declines in its monthly active users, funded accounts, assets under custody, and average revenue per user. As a result, analysts such as JP Morgan downgraded their target price and concluded “we believe Robinhood has been overearning and guidance will weaken for ’22.” On this news, Robinhood’s stock declined nearly 10.5%, to close at $35.44 per share on October 27, 2021. Then, on November 8, 2021, Robinhood disclosed it had suffered an extensive “data security incident” on November 3, 2021. On this news, the stock declined over two days to close at $34.49 on November 10, 2021. The stock now trades at just around $19.00, or at just 50% the IPO price.
If you purchased shares of Robinhood Markets, Inc. (HOOD) pursuant to the Company’s IPO, you have until February 15, 2022, to ask the court to appoint you lead plaintiff for the class.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
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About Robbins LLP: A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. To be notified if a class action against Robinhood Markets, Inc. settles or to receive free alerts when corporate executives engage in wrongdoing, sign up for Stock Watch today.
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