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Well howdy there folks and welcome into today’s video i hope you guys are doing great out there as always today we gotta talk about robin hood they are back in the news again okay i know it has been a a rough past couple years for robin hood something big is brewing underneath the surface when it comes to the robin hood app and something they’re planning on

This could uh be something that a lot of other brokerages try to do as well so we’re going to cover this my opinion on this things like this it is a big subject and i know a lot of folks out there use robin hood and like i said this could even be something that maybe other brokerages try to do over time as well so hope you guys enjoyed today’s video all i ask

In return is that you smash that thumbs up button that helps us out huge in the youtube algorithm though we’d actually start here just talking about robin hood’s valuation because it’s interesting right even despite the the the tough patches the the rough spots for uh robin hood over the past couple years which they’ve had several right we we remember them like

This had they’ve had several issues over the past few years and yet look at this company it has just continued to grow its valuation from 2017 1.3 billion dollars to today 20 billion dollars and it almost makes you think for a moment maybe uh all publicity is good publicity in the end because you know over the past few years they definitely got um out there in

In the financial space for some bad things um that that folks really didn’t like whether it been you know situations where you know trades weren’t going through whether it been like hacking situations um you know whether it be that whole gamestop situation and some folks not being allowed to buy the stock or in limits and there’s so many various things that have

Happened over the past few years in relation to robin hood but yet look at the valuation you know the numbers just speak for themselves as just continue to go go up and up and up in regards to robin hood okay so first off we’ve got to talk about if you’re going to understand why this is such big news here okay uh in relation to kind of what robin hood’s working

On behind the scenes you got to understand what an ipo is that’s an initial public offering that’s when a company goes public okay meaning like you know anybody can buy shares that have like a brokerage account with a robin hood or whoever right fidelity td ameritrade e-trade any of those guys right and so in an ipo situation that’s where obviously a company

That’s private right they issue shares out there and then folks can buy into those shares okay and obviously there’s many many various reasons why you would want to do something like this if you’re a private company trying to become a public company okay and a lot of times you’ll hear things like oh that ipo just went up huge that ipo is up thirty percent in its

First day it’s up fifty percent it’s first day it’s up seventy percent in its first day well here’s the thing you gotta understand about that okay there’s a catch and this catch is a big catch okay most of the time the people that are the retail investors you and me us okay if we want to buy in that stock a lot of times we go down in the shares okay uh because

You just don’t get the best pricing before like the average joes can even get their hands on shares when it comes to an ipo a lot of times that stock’s already gone up 30 40 50 60 percent and by the time the retail investors start getting into it the stock starts usually down trending and down trending right and so and it’s it’s such a false narrative that’s put

Out there sometimes because you hear about all these ipos going crazy and the first thing you start thinking as a retail investor is oh my gosh i gotta start buying these ipos because they just go up like crazy when in reality it is actually other folks that get in before that price spike that are making all the money which aren’t retail investors and the retail

Investors get in and a lot of times you know let’s say the stock was up 50 percent the retail investor jumps in because now they can finally get their hands on some shares right and then i’ll sudden that stock finishes up 30 percent for the day well now the retail investor just lost a ton of money because they bought it when it was up 50 percent now it’s only got

30 percent but yet you’re see out there oh you know xyz company they just went up 30 today and it makes you think oh my gosh i need to start buying ipos left and right okay it’s a catch so this is how a usual like ipo goes and needless to say the retail investors usually don’t get the best of it now it seems like robin hood wants to change the whole game when

It comes to this okay look at this so robin hood will give retail investors access to ipo shares no the first thing i thought about the first thing i thought about when i saw this headline was wait a minute robin hood they’re going to go public soon so oh they’re going to try to give like let’s say robin hood customers early access to the robin hood ipo that’s

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What i was thinking at first as soon as i read that headline that’s what i was thinking this was in regards to because if you if you aren’t in the loop there’s been so many rumors recently about robin hood’s going to go public robin hood’s going to go public okay we don’t know when that is but there’s so many rumors about that right now okay and so that’s where

My mind went initially i’m like oh they’re gonna just try to get it almost seemed like um you know oh they maybe they won’t have the demand for the ipo that they want to have so why not just give a bunch of shares to robin hood customers or something like that allow robin hood customers get in early so it was kind of my initial thought there but it looks like

Things might be going a little different route here okay robin hood is giving amateur investors access to initial public offering shares in its latest move to democratize retail investing okay first off amateur investors cnbc be careful with the word choice okay i don’t like that amateur investing here here let’s look at this average hedge fund versus s p 500

Hedge fund performance here s p 500 performance here hedge fund performance here s p 500 performance here look at this guys look at this okay uh yeah the professionals they aren’t so professional they don’t know what the heck they’re doing out there okay so watch it when you call us the amateur investors okay just because you might have a certain uh degree or

A certain license or something like that doesn’t mean you know any dang thing clearly when we look at these numbers here okay can’t these guys are getting shrouds they’re just absolutely obliterated by the s p 500 okay so back to this this is actually pretty daring interesting okay ipa ipo shares have historically been set aside for wall street’s institutional

Investors or high net worth individuals retail traders typically don’t have a vehicle to buy into newly listed companies until those shares begin trading on an exchange okay remember we just talked about that whole scenario the stocks already up huge then the retail investors finally get to start buying in okay they get to buy high and sell low okay which is

Often after the share price has surged very very important okay we’re starting to roll out ipo access a new product that will give you the opportunity to buy shares of companies at their ipo price before trading on public exchanges with ipo access you can now participate in upcoming ipos with no account minimums robin hood said in a blog post on thursday

Okay essentially you know robin wants to make it their ideal goal what it sounds like here is so you know you and i if some company goes public we can essentially get our hands on shares before you know um the shares have actually gone out there to the public markets and on the exchanges which definitely would be a very different thing than what has ever been

On wall street because like i said a lot of times ipos are just you know you can usually get them a lot cheaper down the road than than what you know after they already started trading on the exchanges it just happens time and time again okay robin hood will not be an underwriter for companies hitting the public markets but will get an allocation of shares by

Partnering with investment banks that makes me think partnering by investment bank so robin hood’s going to have to give something to investment banks right it’s not like investment banks are just going to be like oh here’s here’s a bunch of shares in the new ipo cool guys i i don’t think that’s the way it’s going to work i’ll be completely honest there’s got

To be something the investment banks are going to want from robin hood right that’s usually just how business works right one side wants something and one side wants the other thing right so what that thing is we’ll still have to you know get clear about that okay this move is robin hood’s latest to antagonize wall street yeah i don’t know okay if they’re gonna

Partner with investment banks i’m not so sure about that okay ipo stocks pop on the first day average 36 percent in 2020 according to deal logic demonstrating individual investor thirst for some of these popular names that is not priced into the ipo pricing these are gains a little guys missing out on obviously right because if you can’t buy in until the stocks

Already pop i’m gonna miss out on that huge first gain there okay the traditional ipo process has been criticized in recent years as being broken with investment banks allocating the shares to big clients who reap the the instant first day gains going public by way of direct listing has combated some of these criticisms right we’ve obviously seen direct listings

Boom i mean boom recently right that’s just been something that has taken off in a massive massive way as well as specs right i mean i’ve been doing i’ve been the stock market for you know since 2008 2009 and i don’t even remember really hearing about spax special purpose acquisition companies i don’t really ever remember hearing about them prior to pretty much

Last year okay and i’ve been doing this for a long day time it was always you did an ipo right in like the normal way and if you didn’t do that maybe you did a direct listing but over the past year also everybody wants to do direct listings spax things like that okay which you know definitely puts into jeopardy kind of ipos in general in my personal opinion if

All these companies are going to start considering to do specs and um you know direct listings and things like that and then also investment banks don’t make all that money right which investment banks i’m sure they they love to make some money as well because the the checks on those deals whoo okay they’re big figs ipo to be the first look at this okay using ipo

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Access robinhood clients will be able to request to buy shares at their initial listing pr price range when the final price is set clients will be able to go through with the purchase change or cancel medical scrubs company figs which filed its paperwork to go public to the sec on thursday will be the first company to offer his share on the robin hood app okay

Hmm interesting hey by the way medical scrubs company i would bet they’re coming off probably a record year last year right interesting time to go public right right when you’re coming out for a record year and things are looking really great for you right now right interesting there right but anyways this company is supposed to be the first to try this now keep

In mind there could be this is something really important you got to keep in mind whenever it’s a new company going public right there’s obviously uh a lot that the company you know folks have to kind of understand about the company right we’ve seen with coinbase coinbase is expanding their clients in a massive way right they’re expanding their revenues their

Profits everything assets under management and you know people are just having a hard time kind of understand the business and the stock has just been falling and falling and falling right and so you see that with a lot of companies that go public sometimes it’s just like even if the company’s doing great numbers or you know what people would perceive as great

Doesn’t mean the stock’s going to do great right that’s something to keep in mind and also when it comes to something like this there could be glitches there could be issues it could be problems that’s just something to keep in mind we know robin hood has had their their share of some some issues in the past right and they try to work through those but they

They’ve had some some issues needless to say and so you know when you’re getting in on something that’s like this i don’t know if there’s going to be issues we’ll just have to see but it is something to kind of be aware of this is something new for a company to be trying how does this work out time will tell as far as all that goes okay we currently anticipate

That up to one percent of the shares of class a common stock offered will be basically offered to retail investors through robinhood financial llc as a selling group member via its online brokerage platform figg said in s1 filing document this is the first initial public offering to be included on the robinhood platform and there may be risks associated there we

Go risk associated with the use of the robin hood platform we cannot foresee there we go okay i’m glad they said it there including risk related to the technology or operation of the platform and the publicity and the use of social media by users of the platform that we cannot control the company at it so the company is definitely you know and this is not robin

Hood saying this is that actual company the figs one right they’re saying they’re trying to prep everybody so in case there’s any issues like hey we prepped you guys we told you there was all this potential stuff okay the ipo date isn’t set but companies typically go public one month after uh s1 prospectus is filed with the sec very very important here okay now

We’re going to get to this in just a moment i just want to talk to you guys a moment here okay you know it’s interesting timing that that kind of robin hood has around this right because we know robin hood is going to um potentially go potentially go public at some point this year right there’s so many rumors about it it’s like maybe it happens maybe it doesn’t

But it’s interesting that they want to try to do this at that time because there’s definitely a possibility right that maybe robin hood tries to with their whole ipo right i don’t think i think robin hood could potentially be scared that their their ipo is going to flop right we saw coinbase flop in a massive way we’ve seen robin hood have a lot of issues um over

The or drama you know dramatic situations over the past year or two right and so it’s turned off a lot of retail traders and retail investors from robin hood and so we don’t know what type of demand will be there for a robin hood ipo right um with everything that’s kind of going on and then you put up you put up you know evaluation of 20 billion or 25 billion or

30 billion or whatever right and folks aren’t willing to buy coinbase at 60 billion why they want to you know when coinbase makes potentially well i mean coinbase honestly their latest net income number was more in a three-month span than robin hood made for revenue in all of last year that’s something to factor in there right and so some folks going to look at

It and they’ll be like why would i pay 20 30 40 billion or whatever for robin hood when coinbase you know has has more profitability than than than in three months then essentially robin hood has revenue in a whole year you know so that’s something that folks are going to factor in so maybe robin hood is trying to you know give a here’s the other thing with robin

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Hood right this is a company that got famous because of basically making it free to trade right no commissions well that was great until a few years ago when every single online brokerage switched to essentially allowing you to place trades for free okay and that was something that changed the game forever right and now robin hood has no big advantage right

If every other brokerage out there is going to say we’re going to well we’ll let you place your trades for free too all of a sudden now you’re thinking you’re like okay who’s got the best customer service who’s got the other things that i would enjoy in a brokerage right um and so that’s something to kind of factor in robinhood went from this huge advantage to

Now they have nothing so maybe at least in my opinion they have kind of have nothing over anybody else if anything i think a lot of other companies have things over them right we’ve talked about robin hood’s lack of customer service in the past right um you know i don’t know if robin hood’s finally got a phone number or not but for you know as long as i remember

Robin hood never even had a phone number you could call i mean these are people that are going to hold your money you know how am i going to trust that rob let’s say i put a million dollars over there with robin hood if i can’t call somebody if there’s an issue that’s an issue you know what i mean like you can’t have a million of my dollars and i just like you

Know we just have to talk through email or or text or whatever right that’s just no that’s just ridiculous right so we’ve thought about those sorts of things right and so robin was trying to do something that’s game changing to the next level to make folks say oh let me let me have an account with robin hood to at least do something right and this brings us to

Another issue around robin hood especially in relation to robin hood’s evaluation here so when it comes to the fintech space right it’s not just important about how many users use your platform your app whatever it is right it’s also account sizing okay and if we look at robinhood this has come this is out of the business of apps okay that kind of track this data

Robinhood average account size versus competitors look at robinhood 3 500 bucks e trade 100 000 t ameritrade 110 000 charles schwab 240 000 i wish i would have fidelity up there but they don’t okay when you see something like that that is definitely worrisome and that makes you know robin hood has to do something because here’s the thing a robin hood’s getting

Attacked in the low end right because you have services like weeble that have come out of nowhere over the past year or two right offering people free stocks you have other companies offering free stocks so they’re competing for the the clients with you know let’s say less than ten thousand dollars right you have so much competition in that space right and then the

Bigger companies are going to continue to attract clients that have hundreds of thousands of dollars or millions of dollars in the market or plan to get to those type of levels right and so that puts robinhood in this situation where they’re like okay we’re having trouble now starting to compete in the low end because we have so much competition that’s coming out

Out of nowhere the last couple years and then on the high end what do you have like why why would i use robinhood over using fidelity investments right why would i use robinhood over using td ameritrade like why like literally why would i move my millions and millions and millions of dollars over to those platforms uh or over to robin hood rather than use those

Type of platforms right like like fidelity and tdr merch like it just doesn’t make sense right that would be like you can’t even like conceive that idea that would just be ridiculous right and so robin hood has to launch something that makes somebody like myself say hey that’s interesting robin hood that’s a cool new thing you’re doing over there let me start

An account with you guys and funnel ten thousand and a hundred thousand or something like that right they had to do something because this number is unbelievably low and wall street’s not going to respect uh you know all those user numbers if if the user numbers don’t add up to a lot of money in the end right because what makes these companies valuable is once

Again not just the users but the fact that they have people that use these that have a bunch of money right because the way you kind of think about it is well if a person has a ton of money then we could potentially make a ton of money off that right by offering them different products and services over time if all your clients have three thousand bucks um

There’s gonna be a limited amount of money to make there over time right and so that’s something to kind of factor in there so i think it’s robin hood trying to pivot and change the game into something new which i think is an interesting idea let me know what your guys opinion is in that comment section i want to hear from you guys as always if you’re looking to

Join my private stock group private discord chat check out a brand new video i filmed for you that’ll be pin comment down there much love as always guys and peace don’t forget to smash

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