Wealthfront IPO: Shares of major robo-advisory platform become available

Preliminary trading in shares of Wealthfront Corp has begun on the Freedom (formerly Freedom Broker) client trading system. Wealthfront provides robo-advisory services and is also a digital wealth management platform. In filing for the IPO, the company positioned itself as "one of the first major robo-advisory platforms," Capital.com notes. Reuters notes that Wealthfront Corp was another fintech player that decided to test investor demand for public offerings in the sector.

Later on December 12, the company's securities will appear on the Nasdaq exchange under the ticker WLTH. To participate, click on the ticker WLTH.

Wealthfront has successfully raised $486 million in its IPO, Reuters has calculated . The company placed 34.6 million shares at $14 per paper, which corresponds to the upper limit of the previously announced price range ($12-14). Based on the results of the IPO, the value of the entire company can be estimated at $2 billion, notes Reuters

Lead organizers of the deal were Goldman Sachs, J.P. Morgan, Citigroup, Wells Fargo Securities, RBC Capital Markets.

Founded in 2008, Palo Alto-based Wealthfront is a technology platform offering solutions for investing, lending, wealth management and financial planning. Wealthfront uses automation to build portfolios and deliver services quickly. Originally launched under the name kaChing, the company was renamed Wealthfront in 2011, becoming one of the early players in the automated investing market.

In January 2022, Swiss bank UBS agreed to buy Wealthfront for up to $1.4 billion, but the deal was later canceled by mutual consent, GlobalData writes . The cancelation of the agreement led Wealthfront to create a standalone capital markets strategy, Capital.com writes. By 2025, the company reported 1.3 million clients and $88 billion in assets under management, making it one of the largest independent robo-advisors in the U.S., Capital.com adds.

Wealthfront is positioning itself as a company working at the intersection of artificial intelligence and fintech, which could allow it to "capitalize on the current wave of high valuations for AI-related projects," says IPOX analyst Lukas Muehlbauer (quoted by Reuters).

Markets in general have seen strong demand for fintech company offerings this year, Reuters adds. Sweden's Klarna, U.S. digital bank Chime and Israeli platform eToro are among those that have already gone public. "Demand for new listings remains strong, but the negative news backdrop still has the potential to cool sentiment, which has already been seen several times this year," Muehlbauer noted.

Freedom Holding analyst Alem Bektemirov says Wealthfront's comparative valuation based on an average P/S (ratio of capitalization to total company revenue) of 6.29× peers and annual revenue of $338.6 million indicates Wealthfront's fair value at about $2.129 billion, which equates to $14.56 per share. This is 4% above the $14 offering price, suggesting moderate upside potential. The main risks for the business are related to high competition in the digital investment market, possible loss of clients and legal restrictions in fintech.

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Freedom clients will be able to get access to Wealthfront shares before the opening of the main exchange session. Trading will begin in the early pre-market format 2-3 hours before the U.S. exchanges open (from 15:30-16:30 Astana time). To participate, click on ticker WLTH.

This article was AI-translated and verified by a human editor