Shares in Robinhood Markets Inc. surged 14% at present after Bloomberg printed a report claiming that cryptocurrency trade FTX Digital Markets Ltd. is exploring buying the corporate.
The report, referencing folks with information of the matter, says FTX is deliberating internally on learn how to purchase Robinhood. No formal takeover strategy has been made and FTX might choose towards pursuing the deal.
FTX Chief Government Officer Sam Bankman-Fried neither denied nor confirmed the report. “We’re enthusiastic about Robinhood’s enterprise prospects and potential methods we might accomplice with them,” Bankman-Fried stated in an announcement. “That being stated, there are not any lively M&A conversations with Robinhood.”
The important thing within the assertion is the wording: Bankman-Fried doesn’t deny that FTX is contemplating buying Robinhood, solely stating that there are presently no merger and acquisition conversations, which is according to the Bloomberg report. Notably, Emergent Constancy Applied sciences Ltd., an organization managed by Bankman-Fried, has owned a 7.6% stake in Robinhood since Might.
Any try by FTX to accumulate Robinhood would come at a time of continued points in cryptocurrency markets and an ongoing decline in Robinhood’s share value. After buying and selling as excessive as $55 per share in August, Robinhood’s share value has hit a low of $6.89 per share.
Robinhood has reported common disappointing earnings experiences — 4 straight quarters of misses because it went public in July. The corporate reduce 9% of its full-time staff on April 26 forward of one other disappointing earnings report on April 28.
FTX snapping up Robinhood might ship benefits to each firms. Though Robinhood’s fortunes have floundered, combining the 2 firms would supply synergies. Though Robinhood’s customers are buying and selling much less, they nonetheless have a big buyer base that FTX might leverage.
Robinhood shares closed common buying and selling at $9.12 however dropped nearly 5% after the bell. Robinhood’s market cap sat at $7.95 billion.
FTX is an trade that has raised critical cash — $1.7 billion in whole and $400 million as of its final spherical in January on a $32 billion valuation. Nonetheless, that was earlier than the crypto crash that has seen the worth of in style cryptocurrencies drop by two-thirds and typically extra throughout the yr.
Presuming a premium is obtainable in a deal to accumulate Robinhood, FTX will want someplace within the neighborhood of $8 billion to $10 billion, presumably greater, except the deal is equity-based. Even in its distressed state, Robinhood remains to be a dear acquisition for FTX, given its funds.