Robinhood seeks valuation of up to $35 billion as public company

Robinhood, the online brokerage that found itself embroiled in this year's meme stock phenomenon, will sell shares to the public next week seeking a market valuation of up to $35 billion.

The company said in a regulatory filing Monday that it hopes to price 55 million shares in its initial public offering in the range of $38 to $42 per share. It could raise about $2.3 billion if the shares are sold at the high end of the range.

Robinhood is offering about 52.4 million shares. The company's founders Baiju Bhatt and Vladimir Tenev, and Chief Financial Officer Jason Warnick, are offering about 2.6 million shares. The company won't receive any proceeds from shares sold by its officers and founders.

Robinhood's IPO will give investors a chance to own a big slice of a company that has rocked the traditionally staid brokerage business since its debut in 2014. By offering free trading to small investors, Robinhood forced rivals to get rid of commissions and create apps that make trading easier. But the in the fast-growing stock trading company's popularity hasn't come without growing pains, with Robinhood becoming embroiled in a number of regulatory issues, including one that led to a $70 million fine earlier this month. 

Some critics claim the app encourages risky behavior among beginner investors, even improperly allowing some users to take on more risk than they were perhaps ready for. Robinhood has also been criticized for failing to make clear to customers that it makes most of its money by routing their trades to Wall Street firms taking the other side, or so called "payment for order flow."

The company expects to offer up to $770 million worth of its shares to its customers via its platform. The estimate is based on an offering price of $40 per share, the company said in the filing.

Meanwhile, the venture capital unit of business software company Salesforce.com has indicated an interest in buying up to $150 million in shares of Robinhood at the IPO price, Robinhood said.

17.7 million, mostly first-time investors

The company, based in Menlo Park, California, said in its filing that it had 17.7 million monthly active users as of March and more than half of its customers are first-time investors.

Many of those first-time investors have started trading on Robinhood due to the popularity of meme stocks like GameStop. The trading frenzy that followed forced Robinhood to limit some trades because of the massive volume, and it drew some government scrutiny.

Robinhood said in the filing that it expects that its revenue for the April-June quarter totaled up to $574 million, or a more than twofold increase from $244 million a year earlier. Even so, the company projects it slid to loss in the quarter ranging from $487 million and $537 million. Robinhood posted a profit of $58 million in the same quarter last year.

The company projects revenue in the third quarter will be lower, citing lower levels of trading activity.

The company is expected to make its stock market debut on July 29. It will list on the Nasdaq under the "HOOD" ticker symbol.

The underwriters have an option to buy 5.5 million shares to cover any overallotments.