Wealthfront seeks $485M in IPO as robo platforms vie for younger investors

Wealthfront is moving ahead with plans to go public, leaning on its cachet with younger, digitally native investors as public markets reopen to fintech listings.

The Palo Alto-based robo-advisor launched a roadshow Tuesday for an initial public offering that could raise about $485 million, according to its latest filing with the Securities and Exchange Commission. The company is marketing 34.6 million shares at an expected price range of $12 to $14. Wealthfront is selling roughly 21.5 million shares, while existing shareholders are offering about 13.1 million shares.

Wealthfront first dropped hints of its IPO plans in June, and confirmed those plans a few months later in September.

At the top of the range, Wealthfront would be valued at about $2.05 billion, based on shares outstanding in its Form S-1 filing with the SEC on Tuesday. The company has applied to list on the Nasdaq Global Select Market under the ticker WLTH.

Some of the fast stats in Wealthfront’s filing highlights a business that has grown beyond its origins in automated portfolios to a broader set of banking-like services. The platform managed $88 billion in client assets as of July 31 – up 24% year over year – and it's set to report north of $90 billion as of October 31. Over the 12 months ended July 31, revenue rose 25% to $339 million.

For the six months ended July 31, the firm reported net income of $60.7 million on revenue of $175.6 million, compared with $132.3 million of net income on $145.9 million of revenue a year earlier, reflecting a shift from a prior tax benefit to a $13.3 million tax provision.

Wealthfront says it is targeting a total addressable market of $15 trillion in 2024, growing to $140 trillion by 2045, and points to an annual client retention rate of about 95% and net revenue retention above 120% for each of the last 11 fiscal years. Those metrics may draw attention from advisors watching how younger investors are engaging with low-cost digital platforms rather than traditional wealth managers.

"Incumbent financial institutions justifiably focus on serving their older, wealthy clients because they are the most profitable for those firms," Wealthfront's Tuesday filing says in part. "Our growth has closely tracked the financial maturation of digital natives, reflecting the resonance of our platform with their evolving needs."

Morningstar’s most recent robo-advisor report describes Wealthfront as a solid, low-cost option with a broad range of services and generally high-quality underlying funds, but flags concerns about aggressive portfolio allocations, including sizable emerging-markets exposure and the ability for clients to allocate up to 10% of portfolios to cryptocurrency ETFs. The platform does not offer human financial advisors, instead relying on automation, planning tools, and a goal-based digital experience.

The IPO also marks a return to the public markets for a firm that nearly sold itself. UBS agreed in 2022 to acquire Wealthfront for $1.4 billion, though the deal fell through later that year. Since then, robo platforms have continued to push into areas traditionally dominated by RIAs and brokerages, from high-yield cash accounts to planning tools that aim to keep clients on platform as their assets grow.

Goldman Sachs and JPMorgan are leading the Wealthfront offering, with a syndicate that includes Citigroup, Wells Fargo Securities, RBC Capital Markets, Citizens Capital Markets, Keefe, Bruyette & Woods, and KeyBanc Capital Markets. Funds managed by BlackRock and Wellington Management may buy up to $150 million of the IPO shares, according to the filing.