Robinhood stock surges despite awful IPO; boon for billionaire brothers

• Robinhood co-founders, Vlad Tenev and Baiju Bhatt, became the world’s latest billionaires when the stock went public.
• The trading app had a rocky IPO but bounced back on Tuesday.
• The duo’s net worth could skyrocket based on stock price-based milestones.

Despite a rocky start to Robinhood’s inital public offering — shares closed down 8% from its opening price of $38 per share — the stock, trading under the ticker HOOD, surged on Tuesday, closing at $46.80 per share, up 24.2%. Some are wondering if the spike is caused by traders following a trend, but the brains behind the trading app won’t care that much.

Robinhood co-founders, Vlad Tenev and Baiju Bhatt, became the world’s newest billionaires after the popular, commission-free stock trading app went public last week. And they are now worth $2.1 billion and $2.4 billion, respectively, according to Forbes. The company added more than $7 billion to its value.

Both Tenev, 34, and Bhatt, 36, own around 8% of the company. Some of that is in restricted stock units, a form of stock-based employee compensation, which will be vested in the new few days, the report said, citing the company’s IPO filing.

The duos fortune could rise even higher in the coming years thanks to its stock-award plan, Forbes said:

If they achieve each of these stock price-based milestones, which range from Robinhood reaching $120 per share to $300 per share, Tenev could stand to gain an additional $4.7 billion, while Bhatt could gain over $2.8 billion worth of shares.

Robinhood’s lackluster IPO came as a surprise to some. Their IPO was the worst debut on record based on how much they raised, around $32 billion, according to data by Bloomberg.

It’s the worst first trading session after shares fell 8.4% below the IPO price, dethroning MF Global Holdings, another brokerage firm, record in 2007.

Robinhood didn’t get any help from users on Reddit, the social media platform that caused the meme stock trading craze earlier when investors teamed up and targeted forgotten brands like Gamestop, AMC Theatres, and Nokia to create a huge short squeeze, causing some hedge funds a headache. 

Ranking the new IPO billionaires list

Tenev and Bhartt join an exclusive list of newly minted billionaires thanks to initial public offerings; Forbes estimated that at least 60 of the more than 493 new billionaires that appeared on its annual list this year come from IPOs alone.

Featuring pandemic darlings like DoorDash (a food-delivery company) and Bumble (a Millennial dating app), Robinhood picked up momentum during the months of lockdown when first-time traders, bored without their normal day-to-day distractions, wanted to take advantage of slashed stocks and get into the stock market.

As it stands now (the list was last updated on March 5), Bhartt would rank at No. 5 at $2.4 billion in front of Jared Isaacman, the founder of payment processing firm Shfit4 Payments. Isaacman started the company in his parents’ basement during his teen years, according to Forbes.

Tenev would sit tied for eighth on the list with Gong Yingying, CEO of healthcare analysts firm Yidu Tech, which went public in Hong Kong in January.

Who are Vlad Tenev and Baiju Bhatt?

The mastermind duo first met at Stanford nearly a decade ago, according to the company’s website. After the Occupy Wall Street movement in 2011, Tenev said they wanted to “level that playing field” and create commission-free trading for all people.

Launched in 2013, Robinhood has 17.7 million people trading on its app each month, the majority of whom are first-time investors.