FTX eyes Robinhood acquisition: report

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Shares of Robinhood Markets Inc. jumped 14% on Monday following a report that cryptocurrency exchange FTX is considering a possible acquisition of the commission-free trading platform.

Sources familiar with the matter emphasized to Bloomberg that while the company is deliberating internally about the move, a formal offer has not been made.

Ticker Security Last Change Change %
HOOD ROBINHOOD MARKETS INC. 9.12 +1.12 +14.00%

A Robinhood spokesperson declined to comment on speculation. An FTX spokesperson did not immediately return FOX Business' request for comment.  

GOLDMAN DOWNGRADES COINBASE, UPGRADES ROBINHOOD AMID CRYPTO VOLATILITY

The report comes after FTX CEO Samuel Bankman-Fried took a 7.6% stake in Robinhood last month worth approximately $648.2 million.

UNITED STATES – MAY 12: Sam Bankman-Fried, CEO of FTX US Derivatives, testifies during the House Agriculture Committee hearing titled Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models, in Longworth Building on Thursday, M ((Tom Williams/CQ-Roll Call, Inc via Getty Images) / Getty Images)

According to a 13-D filed with the Securities and Exchange Commission, Bankman-Fried's firm Emergent Fidelity Technologies purchased shares of the commission-free trading platform between March 14 and May 11, ranging from as low as $8.01 per share to as high as $13.85 per share. Bankman-Fried is Emergent's sole director and majority owner.

Robinhood

The filing emphasized at the time that Bankman-Fried acquired the stake because he views Robinhood as an "attractive investment" and that he did not have "any intention of taking any action toward changing or influencing the control" of the company. 

However, it noted that he may engage in discussions with Robinhood's board and investors from time to time regarding its business, performance and investment returns. It also said Bankman-Fried could review options for enhancing Robinhood's stockholder value through "various strategic alternatives or operational or management initiatives" or acquiring additional shares. 

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In the first quarter of 2022, Robinhood posted a net loss of $392 million, or 45 cents per share, compared to $1.4 billion, or $6.26 per share a year ago. 

The platform had a total of 22.8 million funded accounts as of the end of the quarter, including 7.1 million new accounts primarily driven by customer interest in cryptocurrencies. Monthly active users fell 10% year-over-year during the quarter to 15.9 million, while its assets under custody increased 15% year-over-year to $93.1 billion. 

The company offers trading of 11 cryptocurrencies, including Bitcoin, Bitcoin Cash, Bitcoin SV, Compound, Dogecoin, Ethereum, Ethereum Classic, Litecoin, Polygon, Shiba Inu and Solana.

In the beginning of April, Robinhood rolled out a crypto wallet to approximately 2 million customers on its waitlist, which has since fully rolled out to all customers. The company is also planning to integrate the lightning network for near-instantaneous bitcoin transfers globally, with transaction fees of less than a penny.

As a result of cost reduction initiatives, including layoffs of approximately 9% of its workforce, Robinhood expects its full year 2022 operating expenses, excluding share-based compensation, to increase by up to 5% year-over-year. It also expects to incur a restructuring benefit of up to $19 million in the second quarter. 

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