Takeaways from FTX's reported interest in acquiring Robinhood
Bloomberg reported yesterday that crypto giant FTX was weighing options to acquire Robinhood, the stock-trading company that has struggled to regain its pandemic-era prominence.
Why it matters: Investors traded aggressively on the news, with shares of Robinhood jumping 14% yesterday.
In response: FTX released a statement following the story's release that appeared to deny the contents of the article ... but didn't really.
- "We are excited about Robinhood's business prospects and potential ways we could partner with them, and I have always been impressed by the business that Vlad and his team have built," FTX CEO Bankman-Fried said in a statement. "That being said there are no active M&A conversations with Robinhood."
Between the lines: The Bloomberg story claimed that FTX held internal discussions about a potential acquisition, not that it had held M&A conversations with Robinhood.
- When asked if the company had held internal discussions about an acquisition, FTX was more evasive. "We can neither confirm nor deny," the spokesperson said.
- Strategically speaking, an acquisition of Robinhood wouldn't be insane for FTX. The latter has been building out its U.S. business and stepping aggressively into stocks.
- Robinhood was predictably mum on the whole story: "We're not going to be commenting on speculation," a spokesperson responded.
Yes, but: There's a few more steps to go before an acquisition. Namely, the two sides need to actually be in talks — and that currently does not appear to be the case.
There's also the big question of whether Robinhood's two founders, who hold 63% of the voting power in the company, want to sell.
Keeping track: In the spring, Bankman-Fried spent about $648.3 million to buy the initial stake in Robinhood. That stake is now worth $508.7 million.
- That, however, is not a bad thing if the end game is to buy Robinhood. The lower the stock price goes — and the longer it stays that way — the more likely it is that Robinhood sells.
Bottom line: There's several more steps before we get into real M&A territory for Robinhood and FTX. That's not to say a deal can't happen, just that it's early.
- But two things remain true: Investors are watching closely for who could acquire Robinhood, and FTX is set to be a major fintech sector dealmaker in coming months.