Could FTX Crypto Exchange Acquire Robinhood? Here's What We Know

Filings with the Securities and Exchange Commission show that FTX has secured a 7.6% ownership stake in Robinhood, making it the third largest shareholder.

On Monday, Bloomberg reported that cryptocurrency exchange FTX is holding internal discussions to try and acquire popular fintech app Robinhood. Fueling the speculation were filings with the SEC that disclosed a subsidiary of FTX paid nearly $650 million to acquire more than 56 million shares of Robinhood, which represents 7.6% of the app's circulating stock supply. That purchase makes FTX the third largest Robinhood shareholder.

The article notes that no formal M&A discussions have occurred yet. Billionaire founder of FTX, Sam Bankman-Fried is quoted as saying that he sees Robinhood as a good investment with strong potential upside. "We are excited about Robinhood's business prospects and potential ways we could partner with them. That being said, there are no active M&A conversations with Robinhood," the article attributes to Bankman-Fried.

Following the media report, the price per share of Robinhood (HOOD) jumped 14% to close yesterday's trading day on the NASDAQ at $9.12. At the time of writing, the price of HOOD is chopping around the $9 per share range, which would be a venerable steal for FTX if the acquisition speculation pans out since Robinhood has several recent upgrades increasing its utility and potential value.

Robinhood wallet enabled with Bitcoin payment soon to follow

In April, Robinhood announced the launch of its wallet that enabled users to send, receive, and store cryptocurrencies. Until that upgrade, crypto buyers had no way to move their crypto off the Robinhood platform. Within weeks of that news, Robinhood announced that it would soon be compatible with the Bitcoin Lightning Network to enable crypto payments wherever Bitcoin is accepted. Despite those recent enhancements, Robinhood has had financial difficulties of late.

Robinhood has struggled lately

When Robinhood (HOOD) became a publicly traded company listing on the NASDAQ stock exchange last July, it soon soared to an all-time high of $70.94 on Aug. 4, 2021. At press time, it's down 87% at $8.96 per share from its August top. Investment firm Goldman Sachs recently downgraded Robinhood from Neutral to Sell.

"Fading retail engagement, particularly among Robinhood's lower end consumer customer base, could represent further headwinds . While the company has negotiated much better economics on crypto trading, we see the decline in broader industry crypto volumes largely offsetting this tailwind ," according to the analyst note from Goldman.

Despite the macroeconomic issues, lower user demand, and general market malaise, the FTX investment and possible acquisition could be just the financial fix Robinhood needs.