Robinhood Markets, Inc. may have more in common with a casino than a traditional brokerage and investors should view the disruptor with caution ahead of this weeks’ planned IPO. That’s according to IPO Edge Editor-in-Chief John Jannarone, who spoke to Cheddar’s Ken Buffa Monday morning, when he highlighted some of Robinhood’s unusual attributes.
Jannarone pointed out that Robinhood, which is expected to be valued around $35 billion, makes a disproportionate amount of money from “whales” who trade large quantities of options. Such clients, while lucrative, may not be as valuable in the long term as “buy and hold” investors who are typical clients at traditional brokerages. He also pointed out that Robinhood has faced issues with capital adequacy – evidenced by its need to seek a bailout earlier this year during the meme stock craze involving stocks such as AMC Entertainment Holdings, Inc and GameStop Corporation.
Earlier Monday, Jannarone published an article on gaming and media analytics company Engine Media Holdings, Inc., which posted an impressive 360% year-on-year surge in revenue in the quarter ending in May. The company has several businesses, all of which carry unique advantages. He highlighted WinView games, an app-based platform that lets sports enthusiasts play along and have the chance to win money based on their predictions under a “game of skill” format. It’s not structured technically as a gambling platform, which makes it easier to manage laws around betting.
Engine Media uplisted to the Nasdaq in June and trades under the ticker “GAME.”