Robinhood Shares surge 14% on report of FTX’s Possible Buyout

Key Takeaways

  • In May, FTX CEO acquired a 7.6% stake in Robinhood worth $648 million
  •  FTX CEO Sam Bankman-Fried stated that said, there are no active mergers and acquisitions conversations with Robinhood currently.

According to a Bloomberg Report, cryptocurrency exchange FTX is reportedly considering an acquisition of the trading platform Robinhood. FTX is currently measuring the pros and cons of the buyout and is yet to make an offer.

FTX CEO Sam Bankman-Fried has, however, denied the report stating that the company currently isn’t in the process of trying to acquire Robinhood. He also added that they are excited about Robinhood’s business prospects and potential ways we could partner with them,” Bankman-Fried said in a statement to Bloomberg. “That being said, there are no active M&A [mergers and acquisitions] conversations with Robinhood”, said Sam.

According to a Securities and Exchange Commission filing, in May, Bankman-Fried acquired a 7.6% stake in Robinhood worth $648 million, This type of filling is used when someone acquires over 5% of a company but could also signal a potential takeover. The Bankman-Fried acquired the shares in Robinhood with the belief that they “represent an attractive investment.”

Both Robinhood CEO Vlad Tenev and CCO Baiju Bhatt both own nearly 8% of the company and also control over 50% of the company’s voting power. Amid rumors of a possible acquisition, Robinhood shares surged 14% on Monday following news about the potential acquisition. The stock soared 14% to its session high and was briefly halted after a report that FTX was discussing a takeover plan internally, but no offer has been made to Robinhood.

Robinhood is currently going through one of it most rough phases in the past few years. Widespread economic uncertainty and market volatility has gripped Robinhood’s business. According to the recent earnings report, the company’s monthly active user count dipped 10% to 15.9 million in March 2022, compared to 17.7 million in March 2021. Further, Robinhood’s revenue also fell 48% year over year, from $522 million to $299 million.

FTX on the other hand has played an instrumental role in tackling the market uncertainty gripping the crypto economy. FTX extended $250 million in revolving credit to crypto trading platform BlockFi. The CEO Bankman-Fried’s Alameda Research has also lent $500 million to crypto brokerage Voyager Digital during its trying times.

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Saniya Raahath

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