Sam Bankman-Fried, the CEO of leading crypto exchange FTX, has acquired a 7.6% stake in online trading platform Robinhood.
According to a filing with the SEC on Thursday, the billionaire’s shares are worth $648 million and were purchased at an average price of $11.52.
Notably, the deal involved Emergent Fidelity Technologies and Robinhood. Bankman-Fried is the sole director and majority owner of the former.
Following the news, Robinhood (HOOD) stock rose 36% in the after-hours trading session. The price later pulled back and is up 24% over the period, as shown by MarketWatch.
Just prior to the announcement, the company’s shares were trading at an all-time low of $7.73. Compared to HOOD’s July 2021 IPO price, this is a discount of over 75%. So the acquisition of Bankman-Fried has brought some relief to Robinhood’s investors.
SBF invests in Robinhood
According to the US regulator filing, Bankman-Fried bought a stake in Robinhood because he saw it as an “attractive investment.” Robinhood repeated this statement via its communications team in a tweet:
“Of course we also think it’s an attractive investment.”
In addition, the document goes on to say that the shares are an “investment.” As such, the Bankman-Fried does not plan to “alter or affect” Robinhood.
However, the document makes it clear that he will continue to “have discussions” with company management. These considerations may include enhancing “shareholder value” through actions such as “strategic alternatives or operational or managerial initiatives.” In addition, the entrepreneur can acquire further shares in the future if he so desires.
eyes on crypto
Robinhood decided to try his hand at crypto trading in 2018. After that, the company’s revenue grew from $278 million in 2019 to $1.8 billion in 2021. Funded accounts also increased from 5 million to 22 million.
After a dip in equity-based sales, the online broker further ramped up its crypto operations in early January. The move put it on par with leading exchanges Coinbase and Winklevoss-owned Gemini. During the first quarter of 2022, Robinhood attributed a significant portion (18%) of its revenue to crypto-related transactions.
Also in line with its “crypto-first” approach is Robinhood’s acquisition of London-based digital asset platform Ziglu, which is pending regulatory approval.
Recently, Robinhood launched its highly anticipated cryptoWallet launched for its 2 million waitlisted users. The online broker is now planning to transfer the wallet to the Lightning Network from Bitcoin to integrate. The trading app also listed the meme coin Shiba Inu (SHIB)due to high user demand.
But even then, Robinhood had its challenges: Revenue in the first quarter of 2022 fell 39% year over year.
Source: Crypto News Deutsch