Item 5. Market for Registrant’s Common Equity
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information for Common Stock
Our Class A common stock has been listed on the Nasdaq Global Select Market under the symbol "HOOD" since July 29, 2021. Prior to that time, there was no public market for our stock.
Our Class B and Class C common stock are not listed on any stock exchange nor traded on any public market.
Holders of Record
As of February 18, 2022, there were 107 stockholders of record of our Class A common stock. Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to precisely estimate the total number of stockholders represented by these record holders, but based on input from proxy service providers we believe our Class A common stock is held by more than 850,000 separate accounts. As of February 18, 2022, there were eight stockholders of record of our Class B common stock and zero stockholders of record of our Class C common stock.
Dividend Policy
We have never declared or paid cash dividends on our capital stock. We intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash dividends in the foreseeable future. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant. In addition, the terms of our current credit facilities contain restrictions on our ability to pay cash dividends.
Sales of Unregistered Securities
From January 1, 2021 through March 31, 2021, we granted to employees and consultants RSUs covering an aggregate 7.3 million shares of our common stock under our 2020 Plan, and we issued 3.2 million shares of common stock upon exercise of employee stock options under our 2013 Plan and our 2020 Plan. The foregoing transactions did not involve any underwriters, underwriting discounts or commissions, or any public offering. We believe the offers, sales, and issuances of the above securities were exempt from registration in reliance on Rule 701 under the Securities Act because the transactions were pursuant to compensatory benefit plans or contracts relating to compensation as provided under such rule.
In February 2021, we issued two tranches of convertible notes, consisting of $2.53 billion aggregate principal amount of Tranche I convertible notes and $1.02 billion aggregate principal amount of Tranche II convertible notes. We also granted to each purchaser of the Tranche I convertible notes a ten-year warrant to purchase a number of shares of equity securities equal to 15% of the aggregate proceeds invested by such purchaser in the Tranche I convertible notes, i.e., $379.8 million in aggregate maximum purchase amount. (As a result of the IPO, the warrants became exercisable for an aggregate of 14.3 million shares of Class A common stock at an exercise price of $26.60 per share.) The foregoing
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transactions did not involve any underwriters, underwriting discounts or commissions, or any public offering. We believe the offers, sales, and issuances of the above securities were exempt from registration under Section 4(a)(2) of the Securities Act (or Regulation D or Regulation S promulgated thereunder) because they did not involve any public offering.
In August 2021, in connection with the completion of the IPO each outstanding share of common stock was reclassified into a share of Class A common stock and:
• all of our outstanding convertible notes automatically converted into 137.3 million shares of Class A common stock at a conversion price of $26.60 per share;
• all 412.7 million shares of our outstanding redeemable convertible preferred stock automatically converted into an equivalent number of shares of common stock (which were then immediately reclassified as Class A common stock); and
• a total of 130.2 million shares of our Class B common stock were issued to our founders and their related entities in exchange for an equivalent number of shares of Class A common stock.
No additional consideration was paid in connection with these conversions and exchanges. We believe the issuances of the above securities were exempt from registration pursuant to Section 3(a)(9) of the Securities Act because our securities were converted or exchanged by us with our existing security holders exclusively where no commission or other remuneration was paid or given directly or indirectly for soliciting such conversion or exchange.
For a description of sales of unregistered securities during the second and third quarters of 2021, refer to our reports on Form 10-Q for the three-month periods ended June 30, 2021 and September 30, 2021.
Stock Performance Graph
This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return of the KBW NASDAQ Financial Technology Index and the Standard & Poor’s 500 Index. The graph assumes (i) that $100 was invested at the market close on July 29, 2021, the date that our Class A common stock commenced trading on the Nasdaq Global Select Market, in each of our Class A common stock, the KBW NASDAQ Financial Technology Index, and the Standard & Poor’s 500 Index and (ii) reinvestment of gross dividends. The graph uses the closing market price on July 29, 2021 of $34.82 per share as the initial value of our Class A common stock. The stock price performance shown
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in the graph represents past performance and should not be considered an indication of future stock price performance.
ITEM 6. [REMOVED AND RESERVED]
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