FTX’s Sam Bankman-Fried Buys 7.6% Stake in Robinhood, HOOD Surges 23%

Sam Bankman-Fried, the CEO of leading crypto exchange FTX, has purchased a 7.6% stake in the online trading platform Robinhood.

According to a Thursday filing with the US Securities and Exchange Commission (SEC), the billionaire’s shares are worth $648 million, purchased at an average price of $11.52.

Of note, 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 spiked 36% in the after-hours trading session. The price later retracted and was up 24% as of reporting time, MarketWatch shows.

Just before the announcement, the firm’s shares were trading at an all-time low of $7.73. Compared to HOOD’s IPO price of July 2021, this is an over 75% shave-off. Bankman-Fried’s acquisition has, therefore, brought some relief to Robinhood’s investors.

SBF Acquires Stake in Robinhood

Per the filing with the US regulator, Bankman-Fried bought a stake in Robinhood because he regards it as an “attractive investment.” Robinhood, through its communications team, echoed this statement in a tweet reading:
“Of course, we think it is an attractive investment too.”

Additionally, the document goes on to say that the shares are an “investment.” As such, the Bankman-Fried does not plan on “changing or influencing” Robinhood.

The document, however, clarifies that he will, time and again, “engage in discussions” with the firm’s management. These deliberations may entail the enhancement of “stockholder value” through actions such as “strategic alternatives or operational or management initiatives.” More so, the entrepreneur can acquire additional shares in the future, should he wish to do so.

Eyes on Crypto

Robinhood decided to dabble in crypto trading in 2018. Thereafter, the firm’s revenue shot up to $1.8 billion in 2021, from $278 million in 2019. Funded accounts also increased from 5 million to 22 million.

After a fall in stock-based revenue, the online brokerage further intensified its crypto operations in early January. The move placed it at par with leading exchanges Coinbase and the Winklevoss-owned Gemini. In Q1, 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 the London-based digital asset platform Ziglu, pending regulatory approval.

More recently, Robinhood launched its much-anticipated crypto wallet to its 2 million waitlisted users. The online broker now plans on integrating the wallet with Bitcoin’s Lightning Network for faster transactions. The trading app also listed the meme coin Shiba Inu (SHIB), following high user demand.

But even then, Robinhood has had its challenges: Its Q1, 2022 revenue was a 39% decrease year-on-year.