Vlad Tenev attends the 2020 Breakthrough Prize Ceremony at NASA Ames Analysis Middle on November 03, 2019 in Mountain View, California.
Taylor Hill | Getty Photos
Robinhood CEO and co-founder Vlad Tenev can have a paper fortune of over $2.5 billion when the corporate begins buying and selling, based on an SEC submitting. However his actual payday will probably be within the years after, when he may earn one other $4.7 billion in inventory compensation.
Robinhood is searching for a market worth of as much as $35 billion in its upcoming preliminary public providing, with a share value of between $38 to $42 a share. The providing marks the general public coronation of the controversial investing platform that made “democratizing finance for all” its mission. But Robinhood’s thousands and thousands of small buyers have additionally created big fortunes for its founders.
Tenev, 34, and co-founder Baiju Bhatt, 36, will every promote shares value about $50 million within the providing, based on the SEC submitting on Monday. After the providing, they may every personal about 8% of the corporate’s inventory, and collectively they may personal about two-thirds of the voting shares.
Primarily based on the estimate of $38 to $42 a share, Tenev and Bhatt can have every inventory value inventory value between $2.5 billion and $2.8 billion after the providing.
Tenev and Bhatt may earn billions extra within the coming years because of a beneficiant compensation bundle. In Might, Robinhood’s board permitted an incentive plan that may award Tenev as much as 22.2 million restricted inventory items over the following eight years if the inventory hits sure targets. Bhatt would obtain 13.2 million shares beneath the plan.
If Robinhood inventory hits the inventory targets — which begin at $120 and rise to $300 — Tenev would get inventory valued at about $4.7 billion. Bhatt’s shares can be value about $2.8 billion.
Their big liquidity occasion comes eight years after Tenev and Bhatt — who met as physics college students at Stanford in 2005 — based Robinhood with the goal of attracting small, retail buyers. Beginning with an invitation-only enterprise mannequin, Robinhood has exploded, with 22.5 million funded accounts as of the brand new submitting.
But Tenev can also be personally embroiled in firm’s broader controversies. The SEC submitting states that Tenev has acquired “requests for data and in some instances subpoenas” stemming from the sweeping investigations into the corporate’s buying and selling restrictions in early 2021. In January, Robinhood restricted the acquisition of GameStop, AMC and different “meme” shares as a consequence of what it mentioned was an absence of liquidity to adjust to buying and selling laws.
The restrictions led to a wave of class-action lawsuits and criticism from lots of its merchants. In response to the SEC submitting, a search warrant was executed by the U.S. Lawyer’s Workplace to “receive Mr. Tenev’s cellphone.”
The corporate states within the submitting that, “We’re cooperating with these investigations and examinations,” and that, “As a result of very preliminary nature of all of those proceedings, we’re unable right now to estimate the probability or magnitude of any potential losses associated to those issues.”