The recent news of Robinhood filing to go public has taken the finance world by surprise. The popular trading app, which gained notoriety during the GameStop frenzy earlier this year, has grown rapidly in popularity, boasting over 18 million users as of March 2021. However, as with any company going public, there are a number of implications and potential risks to consider.

First, let’s look at some background information. Robinhood was founded in 2013 and quickly gained a following due to its commission-free trades and easy-to-use interface. The company’s mission is to “democratize finance for all,” but some argue that it has led to inexperienced investors taking on risky trades and potentially losing money. This was particularly evident during the GameStop saga, where Robinhood became embroiled in controversy for limiting the trading of certain stocks. The backlash from this event has raised questions about the app’s reliability and trustworthiness.

Despite these concerns, Robinhood’s popularity has continued to surge, with the company reporting $80 million in revenue in Q1 of 2021 alone. However, as noted by industry insiders, the company’s revenue streams are not entirely clear. The trading app has faced criticism for selling its users’ data to market makers, who use it to make informed trades. In addition, the company makes a significant amount of money through “payment for order flow,” which occurs when a brokerage firm (such as Robinhood) sells its clients’ order information to third-party organizations. This practice has come under scrutiny from regulators, with the SEC announcing in March that it is examining the potential risks associated with payment for order flow.

The announcement of Robinhood’s IPO has elicited mixed reactions from industry insiders and social media users. Some are excited about the company’s potential for growth, while others are skeptical about its long-term sustainability. As noted by tech journalist Eric Newcomer, “There’s no question that Robinhood has made a huge impact on retail investing and financial culture more broadly. But going public will also make the company more accountable to public markets and regulators.”

Others have raised concerns about the potential risks of investing in Robinhood. As one Twitter user pointed out, “Investing in Robinhood before their regulatory nightmare is resolved seems like a bad idea. I’m definitely not putting money into that garbage.”

Overall, it is clear that Robinhood’s IPO will have significant implications for the finance world. While the company has certainly disrupted the traditional brokerage industry, it remains to be seen whether it can build a sustainable business model that is able to withstand regulatory scrutiny. As noted by financial analyst Lisa Abramowicz, “Robinhood was the poster child for the democratization of finance, but there have been a lot of questions raised about their practices. Going public will help shed some light on what’s really going on behind the scenes.”