Fintech & EM-focused Analyst, KT Capital Group

Alec Tseung

Alec is a partner in KT Capital Group and the Chinese shareholder representative of a large, listed P&C insurer in Kazakhstan/Central Asia. 

Previously, he served as the Research & Investments Partner at Re:base Ventures (rebase.vc), a Web3 and DeFi investment firm with a strong focus on building and incubation. 

Before that, he spent time with Tencent, where he was responsible for the group's investments in the overseas markets (Southeast Asia, the Middle East, and Europe). 

Prior to Tencent, he was in the Principal Investments team at Swiss Re, where he focused on driving the group's investments into financial services and Fintech sectors in APAC. 

He has been responsible for a wide range of investments and transactions (venture/growth, buyout, direct secondaries, etc.) totaling >$5 billion. Alec started his career with Bank of America Merrill Lynch.

Fintech & EM-focused Analyst

Robinhood - Impact of the Potential Ban On PFOF & Lower Trading Activity

Equity Capital Markets

Robinhood Markets  / Equity Capital Markets

Sheerly looking at Robinhood’s recent financial performance, one might conclude it has embarked on an impressive growth journey and could be a recent success story of Silicon Valley.The payment for order flow generates the majority of its revenue as it sells the clients’ orders to the market makers to fill. As such, Robinhood’s revenue still depends heavily on the users’ trading frequency and volume even though it doesn’t take any commission out of the trades.The company’s rumored IPO valuation of $40 billion represents a significant premium to its peers. It is hard to justify such a premium since it is difficult to gauge Robinhood’s future growth which is largely dependent on its users’ trading frequency and volume in the future.In addition to the company’s over-reliance on the payment for order flow and its potentially rich valuation, there are also significant regulatory concerns. The downside risk is simply too high and outweighs any growth potential the company could still have in the long run.

Sheerly looking at Robinhood’s recent financial performance, one might conclude it has embarked on an impressive growth journey and could be a recent success story of Silicon Valley.The payment for order flow generates the majority of its revenue as it sells the clients’ orders to the market makers to fill. As such, Robinhood’s revenue still depends heavily on the users’ trading frequency and volume even though it doesn’t take any commission out of the trades.The company’s rumored IPO valuation of $40 billion represents a significant premium to its peers. It is hard to justify such a premium since it is difficult to gauge Robinhood’s future growth which is largely dependent on its users’ trading frequency and volume in the future.In addition to the company’s over-reliance on the payment for order flow and its potentially rich valuation, there are also significant regulatory concerns. The downside risk is simply too high and outweighs any growth potential the company could still have in the long run.

Robinhood IPO: Downside Risk Could Outweigh Any Potential Future Upside