FTX CEO Buys 7.6% Stake in Robinhood
Sam Bankman-Fried, often known as SBF, purchased a large stake in the popular online brokerage firm Robinhood.
The troubled online brokerage Robinhood, which gained popularity in the 2021 GameStop trading saga, got some much-needed relief yesterday.
A filing by the U.S. Securities and Exchange Commission detailed that FTX CEO Sam Bankman-Fried bought a 7.6% stake in the trading app. The iconic crypto billionaire purchased $648 million in Robinhood shares at an average price of $11.52.
The news sent the stock flying in after-hours trading, spiking more than 30% on the news. At the time of writing, HOOD is trading at $10.39, which is still a healthy 21% gain.
The filing discloses that SBF began purchasing Robinhood stock in mid-March and only finished his purchases last Wednesday. According to the filing, SBF has “no intention of taking any action toward changing or influencing the control” of the company but merely saw it as an “attractive investment.” The Robinhood social media team unsurprisingly agreed with that assessment:
“Of course we think it is an attractive investment too. We have the best customer base, are introducing great new products, and we have the team to deliver.”
Can Robinhood Get out of the Woods Now?
The purchase comes off the back of a torrid twelve months for the company.
HOOD shares recently hit a low of $7.71, a stunning decline from its IPO price of $55 in July 2021. The company’s revenues have been declining, with Decrypt reporting an 18% decline in Robinhood’s Q1 2022 revenue. That possibly influenced the company’s decision to lay off 9% of its employees just three weeks ago.
However, Robinhood’s crypto division has been growing, with a 13% increase in crypto trading revenue in Q1. The company famously gave in to customer demands last month and listed the popular SHIB meme coin for trading. The announcement came with the rollout of its crypto wallet and plans to integrate the Lightning Network with its app.
Robinhood is hoping that the deal, executed by an SBF-owned Antiguan company called Emergent Fidelity Technologies Ltd, will turn its fortunes around.