Robinhood Stocks Down By 20% Following FTX Acquisition News By CoinEdition

© Reuters Robinhood Stocks Down By 20% Following FTX Acquisition News

  • Binance announces it will buy rival cryptocurrency exchange FTX.
  • Robinhood (NASDAQ:) stocks fall by 20% trading around $9.74.
  • Sam Bankman-Fried might sell his 7.6% stake in Robinhood.

After the news of the leading cryptocurrency exchange platform Binance purchasing rival company FTX due to a liquidity crunch broke out, the stock prices of the trading platform, Robinhood have fallen by 20%.

While Robinhood stocks opened trading at $11.72, the figure transformed into $9.74, once the news of the acquisition broke out.

FTX founder, Sam Bankman-Fried bought a 7.6% stake in Robinhood, back in May 2022. As per a US Securities and Exchange Commission filing, Bankman-Fried purchased 56 million shares of the popular trading app Robinhood, worth around $600 million, via Emergent Fidelity Technologies.

Certainly, the big purchase raised eyebrows and people said that Bankman-Fried had plans to buy Robinhood outright; he clarified that he doesn’t intend to influence Robinhood’s direction while stating the stake “represents an attractive investment.”

Robinhood’s Twitter account supported Bankman-Fried’s claim by sharing “Of course we think it is an attractive investment too.” At the time, Robinhood’s HOOD hiked by 14%, jumping to $9.12.

Upon the news of FTX’s acquisition by Binance, investors reacted rather negatively. According to a report by Mizuho Securities USA analyst and managing director, Dan Dolev:

While the knee-jerk reaction is negative amid Sam Bankman-Fried’s ~8% stake, Robinhood’s exposure to crypto is small as the business remains diversified.

Dolev also mentioned that investors may question the future of Sam Bankman-Fried. He further argued that Robinhood only generates nearly 14% of its revenue by trading cryptocurrency tokens.

Currently, there are speculations about Bankman-Fried selling some part or the entirety of his HOOD stake. However, experts insist that the crisis is temporary.

The post Robinhood Stocks Down By 20% Following FTX Acquisition News appeared first on Coin Edition.

See original on CoinEdition