Despite detractors and challenges, smartphone stock brokerage Robinhood is seeding the next generation of investors and entrepreneurs.



<div class="wp-block-image"><figure class="alignleft size-large is-resized"><img loading="lazy" decoding="async" src="https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-812x1024.jpg" alt="" class="wp-image-47930" width="270" height="340" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-812x1024.jpg 812w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-scaled-300x379.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-scaled-600x757.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-238x300.jpg 238w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-768x969.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-1218x1536.jpg 1218w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-1624x2048.jpg 1624w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-scaled.jpg 2029w" sizes="(max-width: 270px) 100vw, 270px" /><figcaption>SAN FRANCISCO, CA &#8211; SEPTEMBER 06: Robinhood Co-Founder and Co-CEO Baiju Bhatt speaks onstage during Day 2 of TechCrunch Disrupt SF 2018 at Moscone Center on September 6, 2018 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)</figcaption></figure></div>



This morning the stock brokerage trading app Robinhood will issue shares in a public offering that values the eight year old company at some $32 billion. It’s young founders, Vlad Tenev, 34, and Baiju Bhatt, 36, are now worth $2 billion and $3 billion, respectively, and if Robinhood’s shares rise from its expected offering price of $38 to as high as $300 over the next eight or so years, each will be rewarded with several billions more worth of stock. It took Charles Schwab, the famous brokerage industry innovator, a quarter of a century from founding the company in 1971 to grind his way to billionaire-dom at age 59.



Despite some glaring hiccups during its rapid rise, the fledgling mobile phone-based brokerage firm is by almost every measure a triumph of entrepreneurship and innovative marketing. Not since 1975, when the SEC deregulated brokerage commissions, giving rise to discount brokerages like Schwab, has there been a more disruptive force in the retail stock market. Robinhood invented no minimum, commission-free trading, which is now standard across the industry including at TD Ameritrade, Fidelity, Schwab, Vanguard and Merrill Lynch.&nbsp;



Robinhood’s&nbsp; mission, oft repeated, is to “democratize finance for all” and the fact that more than 22 million people — most of them first time investors—have already funded Robinhood accounts is strong evidence of mission accomplished. After all, according to the most recent data from the Federal Reserve only 14% of Americans own stocks directly and slightly more than 50% are invested in stocks indirectly via funds. The two Millennial creators of Robinhood and their army novice traders are not only shaking the financial foundations of Wall Street, but they’re also moving markets, even if the wild meme stock surges and purges they generate are unhinged from traditional valuation models.&nbsp;&nbsp;



<div class="wp-block-image"><figure class="aligncenter size-large is-resized"><img loading="lazy" decoding="async" src="https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-530148978-1024x713.jpg" alt="" class="wp-image-47927" width="543" height="377" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-530148978-1024x713.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-530148978-scaled-300x209.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-530148978-scaled-600x418.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-530148978-768x535.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-530148978-1536x1070.jpg 1536w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-530148978-2048x1427.jpg 2048w" sizes="(max-width: 543px) 100vw, 543px" /><figcaption>NEW YORK, NY &#8211; MAY 10: Co-founder and co-CEO of Robinhood Vladimir Tenev speaks onstage during TechCrunch Disrupt NY 2016 at Brooklyn Cruise Terminal on May 10, 2016 in New York City. (Photo by Noam Galai/Getty Images for TechCrunch)</figcaption></figure></div>



But some caution is warranted. On its way to achieving its mission with astonishing speed, Robinhood has committed three would-be sins. First, in order to attract young inexperienced investors, it gamified, dumbed down and made its trading app highly addictive, using many of the same techniques employed by social media startups and video game makers. Its second sin, according to critics, is that underpinning its profit model is the need to sell its customers’ orders to Wall Street’s biggest sharks, quantitative trading firms like billionaire Ken Griffin’s Citadel Securities. Both of these controversial tactics figured prominently in Congressional Hearings last March over trading in meme stocks like GameStop.



Finally, Robinhood has done a poor job handling its customers’ trades, for which it has paid over $130 millions in fines, settlements and penalties. The trading platform was all but inoperable during the most volatile trading days of the Coronavirus crisis, leading to numerous class action lawsuits, which remain ongoing. During the meme stock bubble of 2021, it halted trading in a handful of stocks like GameStop and AMC Entertainment as it faced billions of dollars in margin calls, outraging customers and lawmakers. The incident forced Robinhood to raise billions of dollars in emergency convertible debt in February, which will be yet another windfall for hedge funds. The $2.5 billion in convertible notes it raised carry high interest rates, low conversion hurdles and a goody bag of $369 million in warrants, which will dilute the company’s stock. The problems are ongoing. Scores of federal and state authorities continue to home in on Robinhood and investigate the company. Co-founder Vlad Tenev even had his cell phone seized.&nbsp;



<div class="wp-block-image"><figure class="alignright is-resized"><img decoding="async" src="https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fspecials-images.forbesimg.com%2Fimageserve%2F610289e2f67bf865370ee929%2F1998%2F0x0.jpg%3Ffit%3Dscale" alt="1998" width="-51" height="-70"/><figcaption>Forbes April 6, 1998 cover.&nbsp;FORBES</figcaption></figure></div>



Ultimately, Robinhood’s long term success and legacy will depend on whether the good that Robinhood is achieving, disrupting Wall Street and introducing millions of newcomers to investing, outweighs the negative effects and risks to which it is also exposing them. Among its 22 million customers, it considers 98% to be “monthly active users,” greater engagement than a social media app. But its revenues are concentrated, driven by a mob of speculators who can be wiped out in a day, week or month. Consider this: Robinhood’s customers hold $80 billion in assets under custody, including $2 billion worth of options. However, those options trades represented 37% of Robinhood’s overall revenues last quarter.



Regardless of the risks inherent in its operating model, it&#8217;s likely that Robinhood’s baby-faced legions will become tomorrow’s entrepreneurs, financiers and long-term investors. In 1998, during the dotcom stock frenzy, Forbes ran a cover profiling young day traders under the headline “A Bunch Of Kids Are Tormenting Wall Street!” Twenty three years later, the renegade “guerrilla marketmaker” featured on our cover, Serge Milman is 48. He manages a hedge fund and is co-founder of 840 Venture Partners, a VC&nbsp; firm with investments in startups including Robinhood competitor, Public.com. “I’m totally part of the establishment now,” says Milman.



Forbes reporters first began tracking Robinhood in 2014, not long after its inception. In 2015, the brokerage startup was named to our inaugural Fintech 50 and in 2016 founder Vlad Tenev appeared on our 30 Under 30 list.  Below you will find the best of Forbes coverage of Robinhood including our award winning stories in 2020 covering the tragic <a href="https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-year-old-robinhood-customer-dies-by-suicide-after-seeing-a-730000-negative-balance/?sh=57e9d3b16384">death by suicide of 20-year old Robinhood trader</a> Alexander Kearns and our deep dive into Robinhood’s business practices, “<a href="https://www.forbes.com/sites/jeffkauflin/2020/08/19/the-inside-story-of-robinhoods-billionaire-founders-option-kid-cowboys-and-the-wall-street-sharks-that-feed-on-them/?sh=2bbcf90b268d">The Inside Story Of Robinhood’s Billionaire Founders, Option Kid Cowboys And The Wall Street Sharks That Feed On Them</a>.”



By Matt Schifrin, Forbes Staff &amp; Antoine Gara, Forbes Staff

US-STOCK-INVESTMENT-ROBINHOOD

Robinhood’s IPO Triumph: More Than A Billionaire Windfall

Stay-at-home consumers and stimulus checks have been a boon for online installment financing, digital banks and day trading.



In 2015, Nick Molnar was living with his parents in Sydney, Australia, and selling jewelry from a desktop computer in his childhood bedroom. Hocking everything from $250 Seiko watches to $10,000 engagement rings, the 25-year-old had gotten so good at online marketing that he had become Australia’s top seller of jewelry on eBay, shipping thousands of packages a day.



That same year, he teamed up with Anthony Eisen, a former investment banker who was 19 years his senior and lived across the street. They cofounded Afterpay, an online service that allows shoppers from the U.S., U.K., Australia, New Zealand and Canada to pay for small-ticket items like shoes and shirts in four interest-free payments over six weeks. “I was a Millennial who grew up in the 2008 crisis, and I saw this big shift away from credit to debit,” the now 30-year-old Molnar says today. Either lacking credit cards or fearful of racking up high-interest-rate debt on their credit cards, Molnar’s generation was quick to embrace this new way to buy and get merchandise now, while paying a little later.



Five years later, Molnar and Eisen, who each own roughly 7% of the company, have become billionaires—during a pandemic. After initially tanking at the start of lockdowns, shares of Afterpay—which went public in 2016—are up nearly tenfold, thanks to a surge in business tied to ecommerce sales. In the second quarter, it handled $3.8 billion of transactions, an increase of 127% versus the same period a year earlier.



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<h3 class="has-text-align-center has-vivid-red-color has-text-color wp-block-heading">Buy Now, Pay Later</h3>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">After a steep drop in Afterpay’s stock in March, the eCommerce boom and credit card-weary Millennials have propelled the installment payment company’s stock to record highs, nearly doubling its value in six months.</blockquote>



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They are not the only ones whose fortunes have taken off in the last few months. According to Forbes’ analysis, at least five fintech entrepreneurs including the two Aussies have been vaulted into the billionaire rankings by the pandemic. Others include Chris Britt, founder of digital bank Chime, and Vlad Tenev and Baiju Bhatt, the co-CEOs of “free” stock trading app Robinhood. Several other founders from such companies as Klarna and Marqeta have also gotten boosts and are suddenly approaching billionaire status.&nbsp;



As in other sectors, the Covid recession has created both fintech winners and losers. For example, LendingClub, which offers personal loans to higher-risk consumers, laid off&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2020/04/21/lending-club-is-laying-off-460-employees-or-30-of-staff/#4ddcb1bc3c7e">30% of staff</a>; small business lender On Deck was sold in a&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2020/05/11/fintechs-for-sale-post-covid-its-partner-or-perish-for-many-startups-heres-a-buy-list/#2747c79f6b3b">fire sale</a>.



But for a sizable crop of consumer-facing and payments-related fintechs, the virus has delivered a gust of growth, just as it has for e-commerce behemoth Amazon and&nbsp;<a href="https://www.forbes.com/sites/greatspeculations/2020/09/14/zoom-docusign-okta-work-from-home-stocks-poised-for-further-gains/#76e7336611b2">work-from-home players</a>&nbsp;Zoom, Slack and DocuSign.&nbsp;



“Consumer fintech adoption was already strong pre-pandemic, especially among the 20s to early 40s age group,” says Victoria Treyger, a general partner who leads fintech investing at Felicis Ventures. “The pandemic has become a growth rocket, fueling the rapid acceleration of adoption across all age groups, including 40- to 60-year-olds.”



Several Covid-driven developments are helping specific types of fintech players. For example, consumers’ shift to more online spending and delivery services is a boon to certain companies powering payments. Marqeta, a specialized payments processor whose clients include Instacart, DoorDash and Postmates, has been in talks to go public at an&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2020/07/17/pandemic-power-payments-company-marqeta-could-fetch-8-billion-in-ipo-doubling-value/#3a7e25491c9e">$8 billion valuation</a>, four times&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2019/03/26/it-took-three-tries-but-this-entrepreneur-transformed-his-struggling-startup-into-a-2b-unicorn/#4cdfdd23706d">what it was valued at in March of 2019</a>. That would give CEO Jason Gardner, who owns an estimated 10% of Marqeta, a stake worth $800 million.



Meanwhile, the $2 trillion-plus CARES Act Congress passed in March, with its $1,200 per adult stimulus checks, student loan payment holiday and (now expired) $600 a week unemployment supplements, helped many Americans keep financially above water—and some digital banks like Chime to prosper. 



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<h3 class="has-text-align-center has-vivid-red-color has-text-color wp-block-heading">Debit It!</h3>



<h4 class="has-text-align-center has-white-color has-black-background-color has-text-color has-background wp-block-heading">Spending on the travel and luxury items U.S. consumers typically put on credit cards has fallen with the pandemic, while spending on debit card necessities is up.</h4>



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In the second quarter of 2020, amid Covid lockdowns and fears, consumers slashed spending on travel, restaurants and luxury items they usually put on their credit cards, but continued to spend on necessities and smaller items—the sort of things they’re more likely to pay for with debit cards. During that quarter, Visa credit card transaction volumes were down 24% from the year before, while debit card transactions were up 10%, according to research firm MoffettNathanson. And debit cards (rather than checks or credit cards) are the spending vehicle most frequently offered by fintech neobanks like SoFi, Dave and MoneyLion.



San Francisco-based digital bank Chime, in particular, has used the stimulus payments to its advantage. In mid-April, about a week before the $1,200 government-stimulus checks started hitting Americans’ accounts, the company&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2020/04/09/digital-bank-chime-now-offering-stimulus-check-advance-to-100000-users/#40758dfb1c10">advanced customers that money</a>, eventually extending over $1.5 billion. “Following the stimulus advance, we had the largest day for new enrollments in the history of the company,” CEO Britt reports.



The pandemic has depressed total consumer spending, and the unemployment rate remains at a high 8.4%—two factors that affect Chime’s middle-income customer base. Yet on a per-user basis, “average spend per customer is up over last year,” Britt says. “Part of the reason for that is the government programs around stimulus payments and unemployment.”&nbsp;



Today, Chime’s annualized revenue is running at a $600 million rate, according to a person familiar with the private company’s numbers. At its eye-popping new valuation of $14.5 billion announced along with a $485 million fundraise in mid-September, venture capitalists are valuing the company at 24 times its revenue. Some investors are asking if Chime should get such a lofty value when Green Dot, a publicly traded fintech that offers checking accounts and prepaid debit cards for low-income customers, trades at two times revenue. “We really look more like a payments-processing business,” answers Britt. That’s because virtually all of Chime’s revenue comes from interchange—the fees merchants pay when Chime’s users swipe their debit cards. The company doesn’t make money on interest through its new secured credit card (that’s a starter card where the holder puts up money to cover his or her credit limit), although Britt says he doesn’t rule out lending in the future.&nbsp;



Now Britt himself has sailed into the “three comma club.” Forbes estimates his Chime stake is at least 10%, meaning his holdings are worth $1.3 billion-plus (Forbes applies a 10% discount to all private company holdings). And he’s planning an IPO. “Over the next 12 months, we have a number of initiatives to get done to make us even more IPO-ready,” he says.&nbsp;



<div class="wp-block-image is-style-default"><figure class="alignleft size-large is-resized"><img loading="lazy" decoding="async" src="https://www.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-812x1024.jpg" alt="" class="wp-image-47930" width="286" height="360" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-812x1024.jpg 812w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-scaled-300x379.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-scaled-600x757.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-238x300.jpg 238w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-768x969.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-1218x1536.jpg 1218w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-1624x2048.jpg 1624w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1027918206-scaled.jpg 2029w" sizes="(max-width: 286px) 100vw, 286px" /><figcaption>Robinhood Co-Founder and Co-CEO Baiju Bhatt. (Photo by Steve Jennings/Getty Images for TechCrunch)</figcaption></figure></div>



Then there’s the Robinhood phenomenon. The boredom of being stuck at home, wild stock market swings, and government stimulus checks have turned some Millennials and Generation Zers into day traders and options players. Robinhood’s most recent fundraising round in September gave it an $11.7 billion valuation and its cofounders a paper net worth of $1 billion each. But considering Morgan Stanley’s $13 billion February acquisition of E-Trade and Schwab’s earlier purchase of TD Ameritrade for $26 billion, some think Robinhood could garner a $20 billion valuation if it went public or were acquired. 



If there’s one fintech segment that has been an unalloyed pandemic winner, it’s the business Afterpay is in: online point-of-sale installment financing. It’s benefitting from both consumers&#8217; shift to online buying and their reluctance, in these uncertain economic times, to take on new credit card debt.



While Afterpay’s Nick Molnar and Anthony Eisen hit billionaire status in July, their competitors aren’t far behind. Take Klarna, which was founded in Stockholm in 2005 and entered the U.S. market in 2016. Two of the three founders, Sebastian Siemiatkowski and Niklas Adalberth, met while flipping patties at a Burger King in Sweden. They pioneered the buy-now, pay-later model in fintech, calling it “try before you buy” and letting people own products for 30 days before making their first payment. (That’s a lot more attractive than old-fashioned layaway, the store system once popular for Christmas gifts and large appliance purchases, in which buyers had to make all their installment payments before getting an item.)



Klarna charges retailers 3% to 4% of each transaction—slightly lower than the 4-5% Afterpay charges—to offer its service. One key difference that separates the two companies: Klarna is becoming a full-fledged financial services business. It became a licensed bank in Sweden in 2017 and offers longer-term financing of up to 24 months, with interest charged, for high-ticket items like laptops sold through a small number of retailers. Siemiatkowski has already turned Klarna into a digital bank in Europe with a debit card for spending on everyday purchases. He’ll likely do the same in the U.S. soon.



<div class="wp-block-image is-style-default"><figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" src="https://www.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1193300011-1024x683.jpg" alt="" class="wp-image-47928" width="350" height="233" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1193300011-1024x683.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1193300011-scaled-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1193300011-scaled-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1193300011-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1193300011-1536x1024.jpg 1536w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1193300011-2048x1365.jpg 2048w" sizes="(max-width: 350px) 100vw, 350px" /><figcaption> Co-founder and CEO of Klarna Sebastian Siemiatkowski . (Photo by Noam Galai/Getty Images for TechCrunch)</figcaption></figure></div>



The pandemic has catapulted Klarna’s business onto a steep trajectory. By the end of 2020’s first half, its U.S. customer base hit nine million, up&nbsp;<a href="https://www.klarna.com/assets/sites/15/2020/08/27060125/Press-release-Klarna-interim-report-January-June-2020.pdf" target="_blank" rel="noreferrer noopener">550%</a>&nbsp;from the same period the year before. Globally, 55,000 consumers are downloading the Klarna app every day, more than two times last year’s pace. Klarna is now available in 19 countries, has 90 million users and expects to bring in more than $1 billion in revenue this year. When it raised a new round of funding last week, its valuation nearly doubled from a year ago, hitting&nbsp;<a href="https://www.klarna.com/international/press/klarna-announces-650m-funding-round-to-further-accelerate-global-growth" target="_blank" rel="noreferrer noopener">$10.7 billion</a>.



Cofounder Victor Jacobsson has a 10% stake, while Siemiatkowski’s has 8% in the still-private company. (Niklas Adalberth retains just 0.4% after selling some shares to fund his philanthropic organization and investing in startups. Neither he nor Jacobsson are still involved in Klarna.)



<blockquote class="wp-block-quote is-style-large is-layout-flow wp-block-quote-is-layout-flow">&#8220;Affirm has also enjoyed a special Covid kicker from pricey home fitness gear. Since 2015, it has powered financing for Peloton, and it now finances purchases of Mirror </blockquote>



Not surprisingly, as the installment purchasing fintechs gain more customers and attention, they’re also facing additional scrutiny from regulators. In March, Afterpay agreed to fork over&nbsp;<a href="https://dbo.ca.gov/2020/03/16/point-of-sale-lender-afterpay-agrees-to-cease-illegal-loans-pay-refunds-in-settlement-with-the-department-of-business-oversight/" target="_blank" rel="noreferrer noopener">$1 million</a>, including $905,000 in consumer refunds, after California’s Department of Business Oversight (DBO) concluded the&nbsp;<a href="https://www.afterpay.com/en-AU/terms-of-service#:~:text=Late%20Fee%3A%20%2410%20Late%20Fee,the%20payment%20is%20still%20unpaid." target="_blank" rel="noreferrer noopener">late fees</a>&nbsp;Afterpay charges meant it was running an unlicensed lending business. “Afterpay rejects the view that the Company operated illegally,” the Australian company said in a&nbsp;<a href="https://www.afterpaytouch.com/images/17032020-US-Regulatory-Settlement.pdf" target="_blank" rel="noreferrer noopener">statement</a>. “While Afterpay does not believe such an arrangement required a licence from the DBO, Afterpay has agreed to conduct its operations under the DBO licence as a part of this settlement.” A spokesperson adds that Afterpay “has been applying for, and has been granted licenses [in other states] where needed.” In 2017, Klarna was fined $15,000 in New Hampshire for operating without a lending license. Today Klarna has such licenses in every U.S. state.&nbsp;



Another fintech winner in the installment-payment business is Silicon Valley-based Affirm, the creation of serial entrepreneur Max Levchin, a founder of PayPal, which itself<a href="https://www.forbes.com/sites/jeffkauflin/2020/08/31/paypal-enters-installment-loan-business-targeting-fintechs-affirm-and-afterpay/#1b1568291478"> jumped into the installment business</a> just last month. Between <a rel="noreferrer noopener" href="https://protect-us.mimecast.com/s/4VcgC4xW0MfEm41WiO1FBR?domain=affirm.com" target="_blank">November 2019</a> and <a rel="noreferrer noopener" href="https://protect-us.mimecast.com/s/f0yMC5yAGNi3xkGKtO8dp_?domain=affirm.com" target="_blank">July 2020</a>, Affirm nearly doubled its U.S. users to 5.6 million. It raised $500 million last week at a valuation of more than $5 billion, up from $2.9 billion last year. While Levchin’s exact stake is undisclosed, it’s likely worth hundreds of millions. 



<figure class="wp-block-image size-large is-style-default"><img loading="lazy" decoding="async" width="1024" height="683" src="https://www.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1155293772-1024x683.jpg" alt="" class="wp-image-47929" srcset="https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1155293772-1024x683.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1155293772-scaled-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1155293772-scaled-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1155293772-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1155293772-1536x1024.jpg 1536w, https://cms.forbesafrica.com/wp-content/uploads/2020/09/GettyImages-1155293772-2048x1365.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption> PayPal Co-Founder &amp; Affirm CEO Max Levchin. (Photo by John Lamparski/Getty Images)</figcaption></figure>



Affirm has also enjoyed a special Covid kicker from pricey home fitness gear. Since 2015, it has powered financing for Peloton, whose sales have surged as affluent young consumers, missing the motivation of group exercise classes, have flocked to buy the $2,000-plus stationary bikes with their streaming workout classes. Affirm also now finances purchases of Mirror, the hot $1,495 in-home fitness coaching device acquired by Lululemon this summer.&nbsp;



Of course, the fintech companies’ current lofty valuations depend on consumer spending staying strong and consumers retaining some of the online shopping habits they’ve developed over the past six months. With a pre-election agreement between Congress and the White House on a new stimulus package looking unlikely and the future course of Covid-19 unknown, there are no guarantees. But for now, these fintechs are riding high.



By Jeff Kauflin, Forbes Staff &amp; Eliza Haverstock ,Forbes Staff



With additional reporting by Max Jedeur-Palmgren.

Tag: Robinhood Financial

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