eToro's biggest rival! Robinhood gears up for IPO and additional funding, with a valuation reaching $8.6 billion

The popular U.S. financial products trading platform Robinhood has once again secured funding. After raising $280 million and $320 million in its Series F funding round in May, the company's total valuation has reached an astounding $8.6 billion.

The Explosive Growth of Robinhood

Robinhood, a stock trading platform founded in California, USA in 2013, has been targeting young users and retail investors with its zero-commission strategy. Over the years, it has continued to receive substantial funding and has steadily expanded its platform.

According to the company's announcement on July 13, the Series F funding was led by existing investor Sequoia Capital and included participation from new investors such as NEA, Ribbit, 9Yards Capital, and Unusual Ventures.

Despite being a pioneer in zero-commission trading, Robinhood has come under scrutiny in recent months for making high-risk products easily accessible to investors. In June, a young American faced significant losses due to trading options without understanding the high-risk financial products, leading to devastating consequences.

In response, Robinhood has updated its platform to help users understand how options work. This includes testing users on a series of options trading strategies such as covered calls, cash-secured puts, etc., to ensure users' understanding of options trading.

Coinbase Valued at $8 Billion

While Robinhood was initially expected to go public this year but was delayed to 2021 due to the impact of COVID-19, mainstream U.S. exchange Coinbase is reportedly preparing for a stock market listing, with plans to submit an application to the SEC by the end of this year.

So, compared to Robinhood, which has a more promising future?

Coinbase completed a $600,000 funding round in 2012 and has seen rapid growth year after year. After securing a $300 million funding round in 2018, its valuation also reached $8 billion.

However, with Robinhood's recent rise, major brokerage platforms have also followed suit with zero-commission trading. In comparison, Coinbase still charges up to 0.5% in fees, much higher than many mainstream cryptocurrency exchanges. Despite this, Coinbase still holds a significant position in terms of trading volume.

Furthermore, Larry Cermak, Director of The Block, who previously criticized Coinbase for selling government blockchain analytics software, is very pessimistic about Coinbase's upcoming IPO. He questions whether its valuation is still justified, noting:

Coinbase can still profit by charging high fees to retail investors, but in the current trend, fees will inevitably continue to decrease. What will happen then?

Larry points out that Coinbase's profit model is not sustainable and believes that selling blockchain analysis software to governments is a lobbying tactic to facilitate a successful IPO and build relationships with regulatory authorities. Interestingly, Zhao Changpeng, the founder of Binance, upon hearing about Coinbase's potential IPO, congratulated them but emphasized that Binance will not pursue an IPO and aims to take a more "decentralized" path.