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Despite Robinhood’s Rocky IPO, Each Cofounder Is Now Worth Billions

Popular stock trading app Robinhood listed its shares on Thursday in what turned out to be a downbeat IPO. But while shares closed down 8% from the initial offering price of $38 a share, the company’s two founders are now worth billions of dollars each. 

Robinhood’s cofounders, Vlad Tenev and Baiju Bhatt, each have a 7.9% stake in the company, which includes restricted stock units that will be vesting within a few days, per the company’s IPO filing. Based on a $34.82 closing price, Tenev, 34, and Bhatt, 36, are now worth $2.3 billion each, according to Forbes’ calculations. 

The mobile-friendly discount brokerage, which pioneered commission-free stock trades, sold a total of 52.4 million shares in its public market debut, raising close to $2 billion. Robinhood priced at the lower end of its IPO range at $38 per share, trading on the tech-heavy Nasdaq under the ticker “HOOD.” With Robinhood’s starting price of $38 per share earlier on Thursday, Tenev and Bhatt each started the day worth $2.5 billion, Forbes estimates. The brokerage ended the day with a $29 billion market capitalization—a rich multiple of the company’s $959 million in 2020 revenues.

Last year, Forbes pegged the fortunes of Robinhood’s two cofounders at $1 billion each, based on the company’s private market valuation of $11.7 billion in September 2020. Tenev and Bhatt each sold 1.25 million class A shares as part of Robinhood’s public offering on Thursday, amounting to nearly $48 million worth of stock; after paying taxes, that number will likely drop to $36 million. 

Robinhood’s S-1 filing from earlier this month also disclosed an incentive-laden restricted stock award plan that could earn the two cofounders billions in coming years. In late May, Robinhood’s board approved awards of 22.2 million and 13,32 million restricted stock units to Tenev and Bhatt, respectively, which will vest over eight years after the IPO, depending on how the company’s stock price performs.

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.

The two cofounders launched Robinhood in 2013 with the oft repeated mission to “democratize finance for all.” Now, with more than 22 million people—most of them first time investors—who have funded Robinhood accounts, it’s a testament to the company’s rapid growth. Since the onset of the coronavirus pandemic in 2020, Robinhood has continued to add millions of new accounts as droves of millennials signed up to trade stocks and options.

While the company was successful in disrupting the entire brokerage industry by slashing fees—eventually forcing much larger competitors to follow suit—it has not been without growing pains, especially in recent years. 

To date, the company has paid over $130 million in fines, settlements and penalties to regulatory agencies including FINRA for the way it handles customers’ trades and the chronic outages on its platform. What’s more, Robinhood has faced criticism for how it makes money: As detailed in a Forbes investigation in August 2020, the company generates the bulk of its revenue from so-called “payment for order flow,” essentially selling customers’ orders to trading titans like Citadel Securities.

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