Robinhood Shares Jumps 14% after FTX Acquisition Claims
- FTX CEO Bankman-Fried purchased Robinhood shares worth $648 million, about 7.6 percent, last month.
FTX, a renowned crypto exchange, is reportedly making moves to acquire Robinhood Markets Inc. (NASDAQ: HOOD), according to Bloomberg. Consequently, HOOD shares closed June 27 trading at $9.12, up 14 percent from the day’s opening price. However, HOOD stock has dropped approximately 5.04 percent during the extended trading period after FTX confirmed there is no ongoing acquisition conversation between the two companies.
“We are excited about Robinhood’s business prospects and potential ways we could partner with them, and I have always been impressed by the business that Vlad and his team have built,” Bankman-Fried said. “That being said there are no active M&A conversations with Robinhood.”
As observed in a filing with the Securities and Exchange Commission, FTX CEO Bankman-Fried purchased Robinhood shares worth $648 million, about 7.6 percent, last month.
Due to the current market pressure and increasing competition, Robinhood has reported a notable decline in revenue. For instance, Robinhood’s revenue declined by 43 percent to $299 million in Q1 2022 compared to $522 million a year ago.
Additionally, transaction-based revenues decreased by 48 percent to $218 million in Q1 2022 compared to $420 million the same time a year ago. Notably, Robinhood’s Monthly active users (MAUs) came in at 15.9 million for March 2022, compared with 17.7 million last year.
Indeed, Robinhood is in a free fall.
FTX and Robinhood Market Outlook
FTX crypto exchange has continued to evolve and challenge its major competitors, particularly Coinbase and Binance. With the crypto winter, forcing some crypto exchanges, like Coinbase to lay off workers, FTX has continued to wax stronger, stressing that it won’t be considering workers’ layoffs.
The CEO in a June 6 tweet boasted that the exchange will “keep growing” for the foreseeable future despite the market downturn.
Additionally, FTX recently issued a whopping $250 million bailout to a popular Bitcoin lender, BlockFi. Also, the crypto platform signed an agreement to purchase the Canadian cryptocurrency platform, Bitvo for an undisclosed amount earlier this month.
FTX has been giving bailouts to a series of startups currently enduring liquidity turmoil owing to crypto winter. Remember, his quantitative firm, Alameda recently tabled a $500million financing to Voyager Digital, a crypto brokerage firm.
On the other hand, RobinHood has attracted a large number of retail investors during the pandemic trading fortune. The brokerage platform enjoyed massive success, especially when it launched its trading app in 2018.
Recently, the broker announced to the world that its crypto wallet is currently being tested. According to Robinhood, about one million customers are anticipating its launch.
Worth noting, that Robinhood has $93 billion in assets under management. Nonetheless, this has not stopped its stock market from declining. According to market data provided by MarketWatch, HOOD shares are down approximately 48 percent YTD.