Sam Bankman-Fried, the billionaire founder of cryptocurrency exchange FTX, has acquired a 7.6% stake in online retail brokerage firm Robinhood, calling it an “attractive investment.”
Bankman-Fried said in a securities filing that he “has no intention of taking any action to change or affect control [Robinhood]“ and bought the share purely as an investment. However, he left open the possibility of asking the company to consider “strategic alternatives or operational or managerial initiatives.”
Robinhood shares rose 25 percent in after-hours trading following the announcement.
Bankman-Fried bought $648 million worth of Robinhood stock at an average price of $11.52. The purchases disclosed by Bankman-Fried began in mid-March and continued through Wednesday, when he bought $27.5 million worth of stock, according to a regulatory filing.
Robinhood went public in a highly anticipated debut last July. But brokerage stocks have faltered as retail client enthusiasm for stock trading has waned in recent months. The broker’s shares had since fallen more than 70 percent ahead of Thursday’s release.
The investment points to the vast wealth that Bankman-Fried, a former Jane Street trader, has amassed during the recent cryptocurrency surge. Forbes puts the net worth of the 30-year-old FTX founder at $21 billion, even after this week’s digital asset sell-off.
Bankman-Fried bought Robinhood stock through Emergent Fidelity Technologies, an investment vehicle he controls.
He is a vocal proponent of effective altruism, a philosophical movement focused on doing as much good as possible with a person’s resources.
FTX, valued by investors at $32 billion, has also penetrated Robinhood’s core business. The company’s US arm opened a waiting list for a new stock trading platform in February and recently one of its top executives preview the function on Twitter.
Robinhood has made major moves into cryptocurrencies as revenue from stock trading has fallen, launched crypto wallets on its platform and added new currencies, bringing it more in line with competitors like Coinbase. It plans to expand internationally as a crypto broker and bought British crypto company Ziglu in April.
Retail trading has fallen to pre-coronavirus levels in recent weeks as a sell-off in markets and rising inflation have dampened investor enthusiasm for stock trading. Robinhood missed its first-quarter revenue targets after reporting a 73 percent year-over-year decline in share trading. Cryptocurrency trading revenue fell 39 percent.
Bankman-Fried spoke about the strength of the broker’s brand: “Robinhood hardly needs to advertise; Her name conveys her brand and message without any added color,” he wrote on Twitter.
He has also criticized the broker, particularly Robinhood’s decision to halt trading in certain stocks at the height of the meme stock trading frenzy. The company was later called before the House Financial Services Committee to explain the incident.
“I don’t think Robinhood did anything wrong,” Bankman-Fried tweeted. “I think they did something inept: they weren’t prepared for heavy use.”