IPOs

Thinkorswim co-founder expects an 'aggressive' yet smooth Robinhood IPO

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Key Points
  • Online brokerage pioneer and trader Tom Sosnoff told CNBC on Tuesday he expects Robinhood's imminent public listing to go well this week.
  • "I think the Robinhood IPO is going to be pretty aggressive, and I think it's going to go quite smoothly," said Sosnoff, who in 1999 co-founded electronic trading brokerage Thinkorswim.
  • The longtime trader praised Robinhood's focus on options and crypto trading, but criticized its limited account types.
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Robinhood's IPO is going to be pretty aggressive: TastyTrade founder

Online brokerage pioneer and trader Tom Sosnoff told CNBC on Tuesday he expects Robinhood's imminent public listing to go well this week.

"I think the Robinhood IPO is going to be pretty aggressive, and I think it's going to go quite smoothly," said Sosnoff, who in 1999 co-founded electronic trading brokerage Thinkorswim, which later sold to TD Ameritrade for $750 million. Sosnoff is now founder and co-CEO of Tastytrade, which broadcasts financial and investment-focused content.

In an interview on "Squawk Box," Sosnoff said he is impressed with the continued "superstar status" of Robinhood, and will invest in the company if the price is right even though he called it "a competitor." He said: "I'm a trader. If it's cheap enough, I like it. If its too expensive, I think it needs to be sold."

Robinhood is scheduled to begin trading on the Nasdaq by the end of this week under the symbol HOOD, seeking a market valuation of as much as $35 billion in its upcoming initial public offering. The California-based stock trading app will attempt to sell its shares at a range of $38 to $42 per share, according to an amended SEC filing.

Robinhood estimates it had 22.5 million funded accounts in the second quarter, compared with 18 million in the first quarter of this year. The app offers equity, cryptocurrency and options trading, as well as cash management accounts.

"I think people, generally, you know, are going to want to believe in the Robinhood offering. … It's really a question if they can maintain their momentum and maintain kind of that, as I called it before, superstar status," Sosnoff said, adding that the options and cryptocurrency trading activity from which Robinhood profits has appeared to slow recently.

Nevertheless, the longtime trader praised Robinhood's involvement in options trading and high-volatility assets like cryptocurrencies, saying, "I think the future of digitization and tokenization is huge." Options trading accounts for about 38% of Robinhood's revenue while crypto is about 17% of revenue, according to the company's S-1 filing with the Securities and Exchange Commission.

However, Sosnoff said Robinhood could struggle to compete in the rapidly growing fintech space without additional product offerings.

"They don't offer all strategies. They don't offer all account types. They are very limited in what they actually offer," he contended. "So, when you think about the competition out there, ourselves and all the other firms that are looking at Robinhood going, 'Hey, you know what, this is app-based technology. We can compete with this.' ... Their product mix? I love it. Options and crypto is where every firm should be right now."

(Robinhood is a five-time CNBC Disruptor 50 company that topped this year's list. CEO Vlad Tenev is among the featured speaker's at this year's Disruptor 50 Summit. You can register for that event at cnbcevents.com.)

CNBC's Maggie Fitzgerald contributed to this report.