Published: Feb. 8, 2023 at 4:52 p.m. ET
Robinhood Markets Inc. on Wednesday said its board had cleared the company to pursue shares owned by Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX that collapsed last year.
Bankman-Fried has a stake of more than 7% in Robinhood HOOD, more than 50 million shares, through Emergent Fidelity Technologies. Analysts have raised questions about the timing of the liquidation of that stake, as Bankman-Fried contends with a variety of fraud charges following the FTX’s implosion.
Jason…
Robinhood Markets Inc. on Wednesday said its board had cleared the company to pursue shares owned by Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX that collapsed last year.
Bankman-Fried has a stake of more than 7% in Robinhood
HOOD
,
more than 50 million shares, through Emergent Fidelity Technologies. Analysts have raised questions about the timing of the liquidation of that stake, as Bankman-Fried contends with a variety of fraud charges following the FTX’s implosion.
Jason Warnick, Robinhood’s chief financial officer, said in a statement that “our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022. The proposed share purchase underscores the confidence the Board of Directors and management team have in our business.”
Shares rose 3% in after-hours trading on Wednesday.
Robinhood also reported fourth-quarter results Wednesday that missed expectations. But the company’s co-founders said they canceled nearly $500 million in share-based compensation to “ensure the company has as many resources as possible” to reward shareholders.
“Co-founder Baiju Bhatt and I announced today that we canceled nearly $500 million of our share-based compensation to ensure the company has as many resources as possible to deliver value to customers and shareholders,” Chief Executive Vlad Tenev said in a statement.
The stock and crypto-trading platform reported a fourth-quarter net loss of $166 million, or 19 cents a share, compared with a loss of $423 million, or 49 cents a share, in the same quarter a year earlier. Revenue rose 5% to $380 million, compared with $363 million in the prior-year quarter.
Analysts polled by FactSet expected a 15-cent per-share loss from Robinhood, on revenue of $396 million. They expected net cumulative funded accounts of 22,950.
Net cumulative funded accounts — or accounts that users put money into — came in at 23 million, up from the prior quarter. Transaction based revenue fell 30% to $186 million. Net interest revenue jumped 165% to $167 million, aided by rising interest rates, spurred by the Federal Reserve.
Robinhood reports as recession fears still weigh on stock trading, and after a vast drop in cryptocurrency prices and more apprehension about digital assets following the collapse of crypto exchange FTX.
Citigroup analyst Christopher Allen, in December, said a “sustained move higher in equity markets” would be needed to accelerate trading activity on Robinhood. The S&P 500 index
has fallen 8.6% over the past 12 months.
After 2021’s meme-stocks boom drew more people toward stock trading, Robinhood has tried to broaden its offerings, including advanced charts, a crypto wallet and retirement-savings services. The company last month formed Sherwood Media, a financial-media outlet.
Robinhood stock has fallen 21.4% over the past 12 months.
