public.com
Auto Added by WPeMatico
Optimism reigns at consumer trading services as fintech VC spikes and Robinhood IPO looms
With the Coinbase direct listing behind us and the Robinhood IPO ahead, it’s a heady time for consumer-focused trading apps.
Mix in the impending SPAC-led debut of eToro, general bullishness in the cryptocurrency space, record highs for some equities markets and recent rounds from Public.com, M1 Finance and U.K.-based Freetrade, and you could be excused for expecting the boom in consumer asset trading to keep going up and to the right.
But will it? There are data in both directions. While recent information could indicate that some of the most lucrative trading activity at companies like Robinhood could be slowing, there’s also encouraging app download information that paints a more bullish picture regarding the durability of the boom in consumer interest regarding savings and investing, which The Exchange has had an eye on for some time.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.
Our question today is this: How bullish are companies in the space about continued consumer interest in equities and other asset trading? And why? We’ll also put similar questions to their backers.
We’ve compiled notes from Accel’s Sameer Gandhi about views concerning Public as one of its backers and Index’s Jan Hammer about Robinhood and its market, as well as comments from Public.com and M1 Finance about what they see regarding consumer trading interest in the future. Thoughts from Robert Le, PitchBook’s senior emerging technology analyst, cap things off.
We’ll start with a short look at some data to help ground ourselves regarding where consumer trading demand appears to be today, then consider what the companies in the ring and their backers are thinking. We’ll close with a synthesis of all the perspectives to come up with hype-adjusted expectations for the rest of 2021.
Bullish data, bearish data
Coinbase executed its direct listing on the back of one of the most impressive quarters we’ve ever seen in the realm of business results, meaning it began to trade when it looked just about as good as a company can. Will the same hold true for Robinhood and company?
Powered by WPeMatico
As expected, stock trading service Public raises $220M at unicorn valuation
The day before Robinhood goes under the the Congressional hammer, domestic rival Public.com announced this morning that it has closed a $220 million funding round at a $1.2 billion valuation. News of the round was first broken by TechCrunch. Further reporting colored in the lines concerning the investment’s size and valuation range.
Confirming the funding news today, Public added a fresh metric to the mix, namely that it has reached one million members – over the course of just 18 months post-launch, the company was quick to point out.
That means that Public’s backers – its latest round was put together by prior investors, including Greycroft, Accel, Tiger Global, Inspired Capital and others – values the company at around $1,200 per current “member.” Whether or not that feels rich, we leave to you to decide.
But with rising interest in the savings and investing space – some data here — and Robinhood’s revenues growing to a run rate of more than $800 million in Q4 2020 and looking even better at the start of 2021, it’s not hard to see why investors are backing Public. It’s even easier if you believe that Robinhood’s brand has undergone material harm from its woes during the GameStop saga.
The pair, along with a host of other fintech services that offer savings and investing products, have been buoyed by a secular shift in banking away from the physical world (in-person shopping, bank branches, plastic cards) to the digital (neo-banks, ecommerce, virtual cards). Robinhood shook up the trading world with zero-cost investing, fitting neatly into the mobile and virtual banking future that is being built. And Public has taken that model a step further by dropping payment for order flow (PFOF), a method revenue generation in which companies like Robinhood get a small fee for sending their users’ trades to one particular market maker or another.
TechCrunch recently joked that it seems like “there is infinite money for stock-trading startups,” in light of the anticipated Public round, which has now has arrived. Let’s see who is next to take home a big check.
Powered by WPeMatico