Robinhood investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than February 15, 2022 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired Robinhood Markets, Inc. (“Robinhood”) (NASDAQ: HOOD) common stock pursuant and/or traceable to Robinhood’s initial public offering (“IPO”) conducted on or around July 30, 2021.
Case Background:
Robinhood is a financial services company headquartered in Menlo Park, California, known for pioneering commission-free trades of stocks, exchange-traded funds and cryptocurrencies via a mobile app.
On July 1, 2021, Robinhood filed with the U.S. Securities and Exchange Commission (“SEC”) a draft registration statement on a Form S-1, which would be used for the IPO following a series of amendments in response to SEC comments. On July 25, 2021, Robinhood filed its final amendment to the Registration Statement, which registered 60.5 million Robinhood shares for public sale. The SEC declared the Registration Statement effective on July 28, 2021. On July 30, 2021, the defendants priced the IPO at $38 per share and filed the final Prospectus for the IPO, which forms part of the Registration Statement (collectively the “Offering Documents”). In the Offering Documents, the defendants stated that Robinhood’s significant growth, technology, and commitment to providing users a highly accessible and safe trading experience is what “sets [it] apart,” from others in the financial services ecosystem.
The truth regarding Robinhood began to emerge after the markets closed on October 26, 2021, when Robinhood reported its third quarter 2021 financial results, revealing that its total net revenue missed analyst estimates by nearly $73 million. Robinhood also reported declines in its monthly active users (“MAUs”), funded accounts, assets under custody, and average revenue per user. Robinhood also disclosed that third-quarter transaction-based revenue from cryptocurrency trading, which in the lead up to the IPO had been the bulk of its revenues, was $51 million, staggeringly below the $233 million Robinhood earned from crypto trading in the second quarter. Following this news, Robinhood’s stock declined nearly 10.5%, falling from $39.57 per share on October 26, 2021 to close at $35.44 per share on October 27, 2021.
Then, on November 8, 2021, after the markets closed, Robinhood disclosed that it had suffered a “data security incident” on November 3, 2021, admitting that an “unauthorized third party” had obtained email addresses for approximately five million users and the full names of a different group of about two million users, indicating that the attack potentially affected nearly 40% of Robinhood’s MAUs. Following this news, Robinhood’s stock declined over 3% on November 9, 2021 to close at $36.70 per share, before then falling another 6% to close at $34.49 the very next day. As of the date the initial complaint was filed, Robinhood’s stock had traded as low as $17.08 per share, or over 55% below the $38 IPO price.
The complaint alleges that Robinhood’s Offering Documents contained representations that were materially inaccurate, misleading, and/or incomplete because they failed to disclose that, at the time of the IPO, Robinhood’s revenue growth was experiencing a major reversal, with transaction-based revenues from cryptocurrency trading serving only as a short-term, transitory injection, masking what was actually stagnating growth. In addition, Robinhood’s “significant investments” in enhancing the reliability and scalability of its platform were patently inadequate and/or defective, exposing Robinhood to worsening service-level disruptions and security breaches, particularly as Robinhood scaled its services to a larger user base.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453 or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.