Golden Observation｜SBF's stake in Robinhood: Is it still far from the acquisition?

FTX founder Sam Bankman-Fried bought 56 million Robinhood shares worth a total of $648 million at an average price of $11.52, according to an official SEC filing. The deal, which is understood to have begun in mid-March, was finalized last Wednesday.

According to the document, SBF completed the acquisition through Emergent Fidelity Technologies Ltd. Based on the closing price of HOOD, SBF's shareholding value is about 600 million US dollars.

The SBF acquisition has sent Robinhood shares soaring, up nearly 25% so far on Friday. Still, the stock is down about 40% this year and is down nearly 90% from its all-time high.

Robinhood shot to fame for its easy-to-use trading app that brought a new generation of investors to the stock market, most notably the meme-stock mania that sent GameStop soaring early last year. Cryptocurrencies are now an important part of its business and a serious competitor to Coinbase .

According to Robinhood's 2022 Q1 financial report released at the end of April, Robinhood Markets' encryption revenue was US$54 million, compared with US$48 million in the fourth quarter of last year, an increase of 12.5% from the previous quarter. Robinhood said that as of March 31, 2022, net cumulative funding accounts increased to 22.8 million from 18 million in the same period last year, an increase "primarily due to strong customer interest in cryptocurrencies in the second quarter of 2021."

In April, Robinhood chief product officer Aparna Chennapragda officially announced the launch of the cryptocurrency wallet at the Bitcoin 2022 conference in Miami, which is available to more than 2 million customers on the whitelist. He said the product shows the company's commitment to the cryptocurrency space, and the crypto wallet enables users to interact with cryptocurrencies outside of Robinhood's trading platform, such as allowing users to buy NFTs. In addition, Robinhood also acquired Ziglu, a London-based financial technology application that allows users to trade several types of cryptocurrencies such as bitcoin. The acquisition will help Robinhood's global expansion.

Although in the filing with the US Securities and Exchange Commission, SBF stated that he has no intention of changing or affecting Robinhood's management structure, buying the company's shares only because it "represents an attractive investment", but there are still analysts who believe that According to this trend, it is likely to indicate that SBF will make a comprehensive acquisition of it in the next step.

In late 2021, SBF revealed that FTX still intends to acquire a U.S. stock brokerage to enable U.S. customers to buy stocks and put FTX in more direct competition with the likes of Robinhood. "This will be a step towards the holy grail of creating a unified financial experience for consumers," SBF said.

Considering that FTX acquired the Japanese compliance exchange Liquid in February this year to explore the Asian market, and Robinhood's layout in the European market, it is not impossible for FTX to acquire Robinhood.

Citi analyst Jason Bazinet believes that Robinhood could be acquired at a price of about $15 per share, especially after the stock price and cryptocurrency prices plummeted, such an event is more likely to happen. Bazinet said: "Given that the value of its stake has declined, we wouldn't be surprised if the company received an acquisition interest."