After news that said Binance is buying Sam Bankman-Fried’s FTX, which owns 8.8% of Robinhood stock, the stock price of the publicly traded exchange dropped 20% to $9.74.
SBF Owning 7.6% Robinhood Shares
Emergent Fidelity Technologies, the firm owned by FTX CEO Sam Bankman-Fried, held 56,273,469 shares of Robinhood at the beginning of this year, making up 7.6% of the firm’s ownership position.
It was reported in an SEC filing that FTX had purchased over 56 million shares of Robinhood, a claim Bankman-Fried denied. However, HOOD’s price rose by 14% in response to the news, to $9.12.
In the midst of the pandemic, people stuck at home with government stimulus money found Robinhood an attractive trading platform and later became popular. A crowd of investors used Robinhood to resist a short squeeze on GameStop in January 2021.
Author of The Antisocial Network, Ben Mezrich spoke to Decrypt,“”Robinhood created this app that’s very fun. It certainly does gamify Wall Street to a point where it makes it as easy as a video game, there’s no fees, and with very little education, you can go on and buy and sell stocks.”
“The double edge of that sword … is that regular people also can lose a lot of money if they don’t have their eyes open and see what can happen,” Mezrich added.
Prior to the news of the FTX acquisition, Robinhood opened the day at $11.72. When news of FTX’s acquisition broke, initially investors expressed a positive reaction, and the price started to rise, but it soon dropped almost 20%.
Cryptomarkets across the globe experienced similar booms and busts, including Binance’s BNB, which went from around $320 to $400 before eventually dipping back below $310.
FTT (symbol: FTT) token fell by nearly 90% to $2.6 from $22 in some exchanges, as of now trading at just above the $5 mark, experts in crypto trading say it could fall further.
In July last year, Robinhood went public at $38 per share, raising nearly $2 billion. Its stock value is roughly 75% below its IPO price right now.