Sam Bankman- Fried, founder of FTX and Alameda Research, has acquired a 7.6% stake in Robinhood.
Robinhood's shares went up as much as 36% in extended trading because of SBF's acquisition. They are still up around 25% despite the fact that prices have fallen back since Thursday evening.
A filing with the U.S. Securities and Exchange Commission SEC SBF said he holds a majority stake in Emergent Fidelity Technologies.
The company, registered in Antigua and Barbuda, bought just over 56.2 million shares of Robinhood, representing 7.6% of the company. The shares were purchased using Emergent's working capital for $648.3 million.
SBF's position is worth $482 million, based on the closing price on May 12th, $8.56 a share. He might be able to erase his losses as data from Bloomberg showed that the stock rose as high as $10.46 in pre-market trading in New York.
SBF stated in the disclosure that he intends to hold the shares as an investment and not influence the company, but his position comes at a crucial time for Robinhood. The company has been struggling with losing market dominance, as its shares fell 77% since its controversial IPO in July 2021.
Robinhood saw its popularity explode in 2020 due to the Pandemic, and managed to capture a significant part of the retail trading market. The popularity of meme stocks and cryptocurrencies on the platform allowed it to have 22.7 million users by the end of last year, which has made Robinhood a force to reckon with in the retail market.
Despite its rising number of users, trading activity on the platform has been steadily declining, and the company has been struggling to keep volumes up and maintain its revenue stream.
Revenue from cryptocurrencies made up 18% of its total net income last quarter, and Robinhood stated that it would be one of its top areas of focus for growth this year. Robinhood has the fuel to expand to the criptocurrency market, with the support of SBF, who indicated in his disclosure that he might take a more active role in the company in terms of strategic initatives.
Robinhood and SBF have both commented on the news, but on its official communication channel, Robinhood has said it is doubling down on creating a multi-generational company where customers can build wealth for their generations.