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Robinhood settles legal fines before IPO; Hertz resumes trading after bankruptcy

Robinhood settles legal fines before IPO

Robinhood Markets on Thursday set the stage for its hotly anticipated stock market launch, after settling legal fines it said were unlikely to be its last and revealing a massive surge in growth in its initial public offering filing.

The online brokerage, which was at the center of a confrontation between a new generation of retail-investor grouping on social media and Wall Street hedge funds in late January, is aiming for an IPO valuation of more than $40 billion.

Menlo Park, Calif.-based Robinhood, fined $70 million by regulators this week for systemic failures and providing false and misleading information, reported a 245 percent jump in revenue last year, according to the filing, as it fed on the surge in trading by ordinary Americans stuck at home amid the pandemic. The filing also detailed multiple government investigations.

However, the growth came at a cost: Robinhood was forced to undertake a lifesaving investor funding round after its finances were stretched at the height of the retail trading frenzy that gripped markets this year.

The trading hysteria helped power a 309 percent jump in revenue to $522 million for the three months ended March 31. But in the same period, the company incurred a net loss of $1.4 billion, which included a one-time $1.5 billion fair-value adjustment to its convertible notes and warrant liability, because of the emergency fundraising in February.

Revenue for the year ending on Dec. 31 rose to $959 million, the company said. Net income was $7 million, compared with a loss of $107 million a year earlier.

— Reuters

Hertz resumes trading after bankruptcy

Hertz Global Holdings shares swung violently in their first session since the company emerged from bankruptcy on Wednesday.

The stock, which resumed trading over-the-counter under a new ticker, “HTZZ,” bounced between massive gains and losses Thursday before closing up 23 percent at $26.99. It opened at $22 and almost immediately surged more than 50 percent to $35 before tumbling to as low as $16, then rising again.

Volatility is nothing new for Hertz; the stock has been on a wild ride since the company filed for bankruptcy a year ago and its trading on the New York Stock Exchange was suspended in October.

Many investors are anxious to see when the shares will be listed on a formal stock exchange, which would mean improved access to capital, more liquidity and increased accountability. A Hertz spokeswoman declined to comment on listing plans.

The stock had been trading over-the-counter under the ticker “HTZGQ” for the past eight months as the shares soared from penny-stock status. Hertz shares rallied more than 500 percent in the first half of 2021 as investors bet on the company’s successful rebound from bankruptcy.

Hertz’s return couldn’t come at a better time. Americans are preparing to take trips for the July 4 holiday, and the cost of renting cars is at eye-popping highs.

— Bloomberg News

Krispy Kreme soars in first trading day

Krispy Kreme’s shares soared in their first day of trading, giving the doughnut chain a much-needed lift a day after it was forced to downsize its initial public offering.

The stock reversed an early decline to jump as much as 24 percent to $21 a share Thursday in New York. The Charlotte-based company, which is owned by the investment firm JAB Holdings, opened at $16.30, below the $17 IPO price.

The roller-coaster debut reflects the volatile environment for U.S. restaurants as the pandemic subsides. Many , particularly those focused on breakfast, faced a difficult period of store closures and reduced sales as the coronavirus led Americans to eat more at home. Krispy Kreme CEO Michael Tattersfield played down the stock’s early performance, saying he was focused more on the investor base than on the stock price.

— Bloomberg News

Apple plans to test a hybrid in-store and work-from-home arrangement for retail employees, acknowledging that consumers may continue to prefer online shopping even as the pandemic eases, according to people with knowledge of the matter. The arrangement will allow employees to work some weeks at their retail stores and other weeks remotely.

— Bloomberg News