Could FTX Acquire Robinhood? Here's what we know

Bloomberg reported on Monday that cryptocurrency exchange FTX is in discussions to try to acquire the popular Robinhood fintech app. The speculation was fueled by documents filed with the SEC which revealed that a subsidiary of FTX paid nearly $ 650 million to acquire more than 56 million shares of Robinhood, or 7,6% of the outstanding shares of the company. app. The purchase makes FTX the third largest shareholder in Robinhood.

The article points out that formal merger and acquisition discussions have not yet begun. FTX billionaire founder Sam Bankman-Fried said he considers Robinhood a good investment with strong growth potential. “We are excited about Robinhood's business prospects and the potential ways we could partner with them. That said, there are no active M&A conversations with Robinhood, ”the article attributes to Bankman-Fried.

Following the news in the media, Robinhood's per share price (NASDAQ shares - HOOD) jumped 14% to close yesterday's trading day on the NASDAQ at $ 9,12. At the time of writing, HOOD's price is hovering around $ 9 per share, which would be a great deal for FTX if the takeover speculation materializes, as Robinhood has made several recent updates that have raised it. usefulness and potential value.

Robinhood's wallet is enabled and Bitcoin payment will follow soon

In April, Robinhood announced the launch of its wallet which allowed users to send, receive and hold cryptocurrencies. Until that time, cryptocurrency buyers had no way to move their cryptocurrencies off the Robinhood platform. A few weeks after that news, Robinhood announced that it will soon be compatible with the Bitcoin Lightning Network to allow cryptocurrency payments wherever Bitcoin is accepted. Despite these recent improvements, Robinhood has been in financial trouble lately.

Robinhood has had a hard time lately

When Robinhood (HOOD) became a publicly traded company last July, it quickly hit an all-time high of $ 70,94 on August 4, 2021. As of press time, the stock is down 87% to $ 8,96. per share compared to the August high. Investment firm Goldman Sachs recently downgraded Robinhood from Neutral to Sell.

“Weakening retail engagement, particularly among Robinhood's low-end customers, could represent further headwinds [negative pressure]. Although the company has traded much better economies on cryptocurrency trading, we see that the decline in cryptocurrency volumes in the industry broadly offsets this tailwind [positive momentum], ”the Goldman analyst's note read.

Despite the macroeconomic problems, falling user demand and general market malaise, the FTX investment and possible acquisition could be the financial solution Robinhood needs.