Robinhood soars after 30-year old crypto billionaire takes stake
It’s been a brutal year for Robinhood. The twin plunges of stocks and bitcoin have crushed the online brokerage’s sales. The company also reported a loss and drop in users. The stock has plummeted 40% this year and Robinhood recently announced a big round of layoffs.But there could be hope on the horizon.Shares of Robinhood surged more than 25% Friday after an investment firm run by 30-year-old crypto billionaire Sam Bankman-Fried disclosed in a Securities and Exchange Commission filing that it has bought a 7.6% stake in the company.
Bankman-Fried, who runs the startup FTX, a cryptocurrency exchange based in the Bahamas, said in the filing that he bought Robinhood shares because he believes they “represent an attractive investment.” He added that his stake is meant to be a passive investment and that he does “not currently have any intention of taking any action toward changing or influencing the control of” Robinhood.
(Of course, Elon Musk’s initial investment in Twitter (TWTR) appeared to be passive before the Tesla (TSLA) and SpaceX CEO changed his mind and then decided to buy all of Twitter…a deal that now is on hold.)FTX has taken the crypto world by storm, attracting more than a million users since launching in 2019, so having its founder as a strategic investor in Robinhood could help give the brokerage more credibility, not to mention a backer with lots of money at his disposal.
The privately held FTX recently raised new funding that values the company at $32 billion. According to data tracked by Forbes, Bankman-Fried, who is also the founder of crypto trading firm Alameda Research, is worth $21.2 billion.
FTX had no further comment about Bankman-Fried’s Robinhood stake. Robinhood issued a statement Thursday on its verified Robinhood communications team Twitter feed, saying that “we’re doubling down on creating a multi-generational company where customers can build wealth for their generations.””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. Our journey is just beginning,” Robinhood added.
The investment from Bankman-Fried could help Robinhood get back on track. Robinhood, along with crypto brokrage rival Coinbase, has struggled this year due to the volatility in the financial markets.Shares of Coinbase, which plunged earlier this week following a lousy earnings report and weak outlook, rallied in tandem with Robinhood on Friday. Coinbase stock was up about 25%. But its shares are still down 30% this week and more than 70% this year.
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