Robinhood Markets, Inc.

On or about July 30, 2021, Robinhood conducted its IPO, offering 55 million shares of its common stock to the public at a price of $38 per share.

On October 26, 2021, after the markets closed, Robinhood released its third quarter financial results, revealing that its total net revenue had missed analyst estimates by nearly $73 million. The company also disclosed that transaction based revenue from cryptocurrency trading, which had earned $233 million in the second quarter before the IPO, had decreased to $51 million in the third quarter.

On this news, Robinhood’s stock fell $4.14, or 10%, to close at $35.44 per share on October 27, 2021, thereby injuring investors.

Then, on November 8, 2021, after the markets closed, Robinhood revealed that it had suffered a “data security incident” on November 3, 2021, in which an unauthorized third party had gained access to email addresses for approximately five million users and full names of around two million users – nearly 40% of Robinhood’s users.

On this news, Robinhood’s stock declined $3.49, or 9%, over the next two consecutive trading days to close at $34.49 per share on November 10, 2021, thereby injuring investors further.

The complaint filed in this class action alleges that the Registration Statement was materially misleading because it failed to disclose, among other things, 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, the Company’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 the Company scaled its services to a larger user base.