FTX CEO said that shares of Robinhood present an attractive investment opportunity. However, HOOD stock has been on a major decline over the last few months.
On Thursday, May 12, Sam Bankman-Fried, CEO of crypto exchange FTX, announced buying a 7.6% stake in one of the zero-commission trading app Robinhood (NASDAQ: HOOD). The FTX CEO disclosed his stake purchase in a filing with the US Securities and Exchange Commission (SEC).
As per the filing, Emergent Fidelity Technologies poured $648 million for a 7.6% stake in Robinhood. Sam Bankman-Fried is the sole director and majority stake owner in the company. The SEC filing also notes that Bankman-Fried acquired the shares with a belief that they “represent an attractive investment”. The filing further adds:
“The Reporting Persons intend to hold the Shares as an investment, and do not currently have any intention of taking any action toward changing or influencing the control of the Issuer”.
It also adds that the FTX CEO will engage with the management “from time to time engage in discussions”. Responding to the news, the Robinhood Communications team noted:
“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 (HOOD) Stocks Jumps 25% after the News from FTX CEO
Soon after the news arrived, Robinhood (HOOD) stock rallied 25% in the aftermarket hours. HOOD stock has been on a freefall and has corrected 90% from its all-time high in August 2021. As of Thursday’s closing, HOOD stock was trading at $8.56.
Robinhood went public last year in July 2021. However, after some initial listing gains, the stock has taken a heavy beating. Robinhood has been facing the ire of its users after the GameStop event in early 2021. The company stopped trading for GameStop Corp (NYSE: GME) stock citing high volatility.
On the other hand, Robinhood continues to report declining earnings every consecutive quarter. This has put severe pressure on its stock price.
But this underperformance hasn’t stopped Robinhood from stepping up its game in the crypto space. Last month, Robinhood announced the acquisition of London-based fintech startup Ziglu to expand its footprint in the European market.
This recent stake purchase might help both – Robinhood and FTX – to work together and take on rivals.