Initial Public Offerings (IPOs) are the new wave when it comes to crypto companies. Thanks to the successful Coinbase listing on the NASDAQ last week, everyone has essentially been looking towards the next crypto or crypto-related firm to go public.
Currently, several firms have lined up bids and are now looking to make their move. However, the most prominent of these firms are Robinhood and eToro. Both companies have made waves in the past few years, providing access to stock trading options and expanding their services to include cryptocurrencies as well.
Below, we look into how these firms are moving towards public offerings and what role this could play in the crypto industry.
eToro: Plans Ready for a SPAC
eToro has been playing with the prospect of an IPO for at least a year now. However, 2021 seems to be the year that the company will take the plunge.
Last month, a press release confirmed that eToro was in discussions with FinTech Acquisition Corp V - a special-purpose acquisition company (SPAC) on a merger worth $10 billion. Both firms are reportedly looking to raise up to $650 million in equity to make the deal happen, and they've already lined up some investors - including the Fidelity Management and Research Company and the SoftBank Vision Fund 2.
FinTech ACV is a SPAC owned by Philadelphia-based banker Betsy Cohen. The firm already holds about $250 million in cash reserves, which it raised last December. It is now looking to grow those reserved to $800 million, with the bulk of the funds going towards funding several growth plans.
eToro's IPO plans have been in motion for a long time. The company definitely has the right finances, revealing earlier this year that it ended 2020 with $600 million in gross revenues. The trading app saw record volumes in 2020, with $1.5 trillion in trades carried out throughout the year.
Most of the company's trades came through crypto, with users enjoying easy access to digital assets when demand and price pegs were going through the roof. With the same thing being witnessed in 2021, this year seems to be as good a time as any to make IPO plans. eToro chief executive Yoni Assia definitely understands this. Speaking with MarketCap, the CEO pointed out that this is perhaps the perfect time to move ahead with a public offering.
"We're seeing an immense interest all around the world from people who want to participate in the global markets, which was our original vision from 2017 when we started our business of opening the global markets for everyone to trade and invest in a simple and transparent way," Assia explained.
Partnering with a firm like FinTech ACV is also a bold move. The latter has significant experience in the Fintech space, and it has an extensive track record of partnering with companies that want to go public. Both firms will be able to bring a new brand - called the eToro Group Ltd. - to the NASDAQ.
Robinhood Goes the Traditional IPO Way
Like eToro, Robinhood is also getting ready for a public offering. The U.S.-based trading app initially set sights to expand into the United Kingdom and a public offering last year, but a slew of technical difficulties forced it to suspend its plans and focus on bolstering its operations.
2021 started on a sour note for Robinhood, with the app being roped into a nasty saga involving Reddit investors, a short squeeze, and GameStop. Robinhood faced calls for investigation and outrage from just about everyone, from politicians to investors to tech industry insiders.
Despite the GameStop controversy, however, the app saw a significant boom in its business operation. This month, the company reported that it saw 9.5 million users trading cryptocurrencies on its platform in Q1 2021 - a 600 percent increase over Q4 2020. The firm also saw significant growth in its overall business, buoyed primarily by crypto traders looking to enjoy commission-free trading.
Like eToro, Robinhood's bosses believe that this is the perfect time to push for a public offering. And they've done that.
Last month, the company confirmed that it had made a confidential submission of a Form S-1 with the Securities and Exchange Commission (SEC). The filing relates to its common stock offering, and while Robinhood has yet to confirm the date for the IPO, it should move forward with plans after the SEC reviews its submission.
Robinhood is also doing work to expand its cryptocurrency trading arm. In a fireside chat last month, company chief executive Vlad Tenev explained that they hope to significantly bolster their crypto trading service. He explained that there are plans to upscale Robinhood's workforce and even add more crypto trading pairs.
"As much as people are bugging me on that on social media, I'm bugging our crypto team and our software engineers. We're going to try and get that done as fast as possible. And we'll see. We might add some new coins along the way," Tenev said.
The CEO also added that Robinhood could develop a crypto wallet. However, he emphasized the need to move with caution as such features will need extensive testing before their rollouts.
Everything definitely looks optimistic for eToro and Robinhood. IPOs are a milestone for any firm. However, these companies and many more are heralding an era of development for the crypto space. Day by day, mainstream adoption looks more like a possibility.