Robinhood shares surge 30% after Sam Bankman-Fried buys $650 million stake

Billionaire founder and CEO of cryptocurrency exchange FTX, Sam Bankman-Fried, has acquired a 7.6% stake in popular online brokerage Robinhood.

The news was well-received by the market and shares of Robinhood (HOOD) initially surged more than 30% in after-hours trading. As of this writing, the price has stabilized at an overall profit of 24%.

According to securities filings filed with the Securities and Exchange Commission on Thursday, Bankman-Fried bought Robinhood stock for a total of $648 million at an average price of $11.52. The purchases disclosed by Bankman-Fried reportedly began in mid-March and continued through Wednesday.

In his securities filing, Bankman-Fried made it clear that he had no intention of taking any action to change or affect the control of the company. [Robinhood],” and made this move because he saw Robinhood as an “attractive investment.”

Robinhood’s communications team told Bankman-Fried to 82,000 followers, “Of course we think it’s an attractive investment.”

The transaction was executed by an Antiguan company called Emergent Fidelity Technologies Ltd, to which Bankman-fried is the sole director and major shareholder.

The announcement appears to have provided short-term relief to Robinhood investors after the stock reached an all-time low of $7.73 on March 12, just a day after the brokerage firm announced that cryptocurrency trading revenue fell 39% year-over-year. -Year (YOY).

Robinhood has made significant strides in the cryptocurrency market as returns from stock-related trading have plummeted. Robinhood currently offers crypto trading capabilities to its users, enabling immediate competition from other US-based cryptocurrency exchanges such as Coinbase and Gemini.

According to Robinhood’s Q1 2022 reportWhile approximately 18% of Q1 net sales came from cryptocurrency-related transactions, cryptocurrency-based sales were down 39% to $54 million compared to $88 million in Q1 2021.

RELATED: Robinhood blamed nearly 1 in 10 employees as inventories hit all-time lows.

In April last year, Robinhood announced plans to expand into a cryptocurrency brokerage by acquiring UK-based cryptocurrency company Ziglu.

Earlier this month, Robinhood launched a highly anticipated cryptocurrency wallet to its 2 million waitlisted users, outlined plans to integrate Lightning Network, and listed Shiba Inu (SHIB) after months of campaigns from supporters.

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