FTX exploring acquisition of Robinhood: Bloomberg
Shares of online, app-based brokerage Robinhood (NASDAQ:HOOD) soared by about 14% late Monday, after a report was released on Bloomberg that crypto exchange FTX was exploring an acquisition of the company.
FTX, whose CEO Sam Bankman-Fried spent in the $650 million range to acquire a 7.6% stake in Robinhood which was revealed in regulatory filings last month, has looked at expanding out of the crypto-only niche for a while. As was exclusively reported by FNG earlier this month, FTX has been expanding its Cyprus office this year with (mainly) hires from the FX and CFD brokerage world, presumably with an eye toward entering the online brokerage business in the EU. FTX has already acquired a CySEC CIF-licensed entity called K-DNA Financial Services Ltd, and received permission to operate the ftx.com/eu website for European clients from that site.
Robinhood shares have been on a nearly year-long slide since going public last July. Initially valued at $32 billion in its IPO (or $38 per share) and then trading briefly at about double that amount, NASDAQ:HOOD shares have plummeted to below $10 and the company is now valued at about $7.9 billion.
Part of the problem has been a possible ban in the US on Robinhood’s preferred way to make money – offering zero-commission trading to clients, and monetizing client trades by selling client orders to large market makers. This payment-for-order-flow (or PFOF) model might be banned in the US, like it has already in several jurisdictions such as Australia and (effectively) the EU.
According to the Bloomberg report, FTX is “deliberating internally” how to buy the app-based brokerage, while Robinhood itself hasn’t received a formal takeover approach from FTX. Robinhood’s co-founders, CEO Vlad Tenev and CCO Baiju Bhatt, control more than 50% of Robinhood’s voting power.
We will continue to follow this story as it develops.