Robinhood is looking for a market value of up to $ 35 billion in its upcoming public offering, with a price per share of between $ 38 and $ 42. The offer marks the public crowning of the controversial investment platform that has made “democratizing finance for all” its mission. Yet Robinhood’s millions of small investors also created huge fortunes for its founders.
Tenev, 34, and co-founder Baiju Bhatt, 36, will each sell shares worth about $ 50 million in the offering, according to the SEC filing on Monday. After the offer, they will each own about 8% of the shares of the company and together they will own about two-thirds of the voting shares.
Based on an estimate of $ 38-42 per share, Tenev and Bhatt will each have a share value of between $ 2.5 billion and $ 2.8 billion after the offer.
Tenev and Bhatt could earn billions more in the years to come from generous compensation. In May, Robinhood’s board of directors approved an incentive plan that would award Tenev up to 22.2 million restricted stock units over the next eight years if the stock meets certain targets. Bhatt would receive 13.2 million shares under the plan.
If Robinhood stock met the stock targets – which start at $ 120 and go up to $ 300 – Tenev would get a value of around $ 4.7 billion. Bhatt’s shares are said to be worth around $ 2.8 billion.
Their giant liquidity event comes eight years after Tenev and Bhatt – who met as physics students at Stanford in 2005 – founded Robinhood with the aim of attracting small retail investors. From an invite-only business model, Robinhood has exploded, with 22.5 million accounts funded at the time of the new filing.
Yet Tenev is also personally involved in the company’s broader controversies. The SEC filing indicates that Tenev received “requests for information and, in some cases, subpoenas” resulting from extensive investigations into the company’s business restrictions in early 2021. In January, Robinhood restricted the ‘purchase of GameStop, AMC and other “meme” stocks due to what he said was a lack of cash to comply with trade regulations.
The restrictions have led to a wave of class actions and criticism from many traders. According to the SEC file, a search warrant was executed by the US attorney’s office to “obtain Mr. Tenev’s cell phone.”
The company states in the filing that “We are cooperating with these investigations and reviews” and that “Due to the very preliminary nature of all of these proceedings, we are unable at this time to estimate the likelihood or extent possible losses related to these issues.
Robinhood is a five-time CNBC Disruptor 50 company that tops the list this year.