Robinhood shares surge after crypto CEO Sam Bankman-Fried buys stake

Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc. appears on a screen during his company’s IPO at the Nasdaq Market location in Times Square in New York City, the United States, July 29, 2021.

Brendan McDermid | Reuters

Robinhood shares rose 24.9% on Friday, a day after the CEO of a major crypto exchange bought a stake in the retail investing app.

A company called Emergent Fidelity Technologies took a 7.6% stake in Robinhood, valued at $648 million, earlier this month, according to a document filed with the Securities and Exchange Commission. The document also revealed that Sam Bankman-Fried, who runs Bahamas-based crypto company FTX, is the sole director and majority owner of Emergent. The stake makes Emergent the third-largest shareholder in Robinhood, FactSet data shows.

Robinhood shares closed at $8.56 on Thursday, the day the document was filed. That was about 77% below the company’s July IPO price.

Bankman-Fried acquired the shares because they “represent an attractive investment,” the filing said, which also said he “intends to hold the shares as an investment” and “has no intention of taking any action to change.” or influencing to seize control of the issuer.”

However, he could enter into discussions with management “from time to time”.

“Of course, we also think it’s an attractive investment,” said Robinhood’s communications team in a tweet Thursday evening in response to news of the investment.

According to the document, Bankman-Fried may also consider “options to increase shareholder value, including through various strategic alternatives or operational or managerial initiatives.” It also said he could buy more shares.

FTX is one of the largest crypto exchanges in the world. It offers derivatives products for more sophisticated traders, as well as spot trading, and has become a rival for big names like Coinbase and Binance. It offers services in the United States through a separate entity, FTX US

Although Robinhood started with stock trading, it enjoyed great success when it launched its crypto trading platform in 2018. Since then, crypto trading has become important to the company’s bottom line. In the fall, Robinhood revealed it was testing a crypto wallet and said the waiting list for it had surpassed 1 million customers. Robinhood shares surge after crypto CEO Sam Bankman-Fried buys stake

Gary B. Graves

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