The price of publicly traded exchange Robinhood stock is down 20%, to around $9.74, on news that Binance will acquire Sam Bankman-Fried’s FTX, which took a 7.6% stake in the popular trading platform in May.
Robinhood opened the day trading at $11.72 before news of the FTX buyout became known.
According to an SEC filing, FTX bought just over 56 million shares of Robinhood, leading some to believe that Bankman-Fried intended to buy Robinhood outright, a claim he denied. Despite this, the price of HOOD jumped 14% on the news of the potential acquisition, to $9.12.
During the pandemic, Robinhood became a popular trading platform for people stuck at home with government stimulus money in their bank accounts. In January 2021, an army of investors used Robinhood to fight off a short squeeze of the retail gaming company GameStop.
“Robinhood created this app that’s very fun. It certainly does gamify Wall Street to a point where it makes it as easy as a video game, there’s no fees, and with very little education, you can go on and buy and sell stocks,” Ben Mezrich, author of The Antisocial Network told Decrypt at the time. “The double edge of that sword … is that regular people also can lose a lot of money if they don’t have their eyes open and see what can happen.”
Robinhood went public in July 2021, selling initial public offering shares at $38 per share, raising close to $2 billion.
In the 1st quarter of 2022, Robinhood saw an 18% decline in revenue after laying off 9% of its staff. The firm blamed a global downturn in casual investment activity at the time. In April, Robinhood was downgraded from “neutral” to “sell” by Goldman Sachs before raising it back to neutral in June.
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This article was first published on Decrypt.co