FTX exploring a deal to buy Robinhood: Bloomberg report

The cryptocurrency exchange FTX is reportedly considering a deal to acquire digital trading platform Robinhood (HOOD), Bloomberg reported Monday, citing unnamed people familiar with the deal.

Robinhood has not yet received a formal notice from FTX of any such takeover, the report said, while adding that FTX could ultimately choose not to pursue a purchase.

The report of a potential acquisition by FTX comes just over a month after Sam Bankman-Fried, the CEO and founder of FTX, disclosed a 7.6% stake in Robinhood, paying $648 million at the time. As of Monday’s close, this position was worth closer to $513 million.

In a statement to Yahoo Finance following this report, Bankman-Fried said: “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. That being said there are no active M&A conversations with Robinhood.”

Robinhood gained 14% on Monday following Bloomberg’s report, triggering at least one trading halt for volatility in the stock. Shares of Robinhood had tumbled by more than 55% for the year-to-date through Friday’s close.

Bloomberg’s report comes just hours after analysts at Goldman Sachs upgraded shares of Robinhood to Neutral from Sell. Goldman put a $9.50 price target on shares while saying “we now see a more balanced risk-reward” for Robinhood.

In recent days, Bankman-Fried’s companies — FTX and Alameda Research — have offered loans to crypto firms in rough financial straits, with some likening his actions to those of Warren Buffett’s during the Financial Crisis.

Bankman-Fried’s crypto exchange FTX offered crypto lender BlockFi a $250 million line of credit. Meanwhile, the 30-year old billionaire’s trading firm, Alameda Research, has given Canadian crypto exchange Voyager a total line of credit in cash and crypto equal to more than $500 million.

Similar to what Binance’s founder, Changpeng Zhao, told Yahoo Finance, Bankman-Fried’s actions could be interpreted both as a profit-making opportunity and a way to squash contagion in a sector where firms remain deeply intertwined in their financial dealings.

Crypto transaction volume on Robinhood’s platform peaked at $233 million in the second quarter of last year; these revenues were down 76% to $54 million as of the company’s most recent quarterly results.

From its peak for the same period, the total crypto market has fallen by 62% according to Coinmarketcap, from $2.5 trillion to $936 billion as of Monday afternoon.


Robinhood’s crypto-related revenues have fallen sharply over the last several quarters. (Source: Robinhood)

Brian Sozzi contributed reporting.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube

 » Read More  » Read More

Tags: No tags

Comments are closed.