Robinhood board gives nod to buy Sam Bankman-Fried’s $578M stake

Robinhood board gives nod to buy Sam Bankman-Fried’s 8M stake

The shares were bought by FTX founder Sam Bankman-Fried and co-founder Gary Wang last year and have been tussled over since the collapse of FTX.

Robinhood’s board of directors has approved a plan to buy back the $578 million stake in their company that was bought by former FTX CEO Sam Bankman-Fried and FTX co-founder Gary Wang last year.

Robinhood confirmed in its fourth-quarter report, published Feb. 8, that it had received board approval to buy back the stake.

“Our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022," said Robinhood’s chief financial officer Jason Warnick, adding:

“The proposed share purchase underscores the confidence the Board of Directors and management team have in our business.”

The FTX co-founders bought 55 million shares of Robinhood stock — worth $578 million at current prices — in May through Emergent Fidelity Technologies by taking out loans directly from FTX’s sister firm, Alameda Research.

On Jan. 9, the United States Department of Justice (DOJ) seized the 55 million shares — equating to around 7% of the company.

We just announced our financial results for the fourth quarter. Find information on our performance at https://t.co/3l82Sx3F7d
— Robinhood Comms (@RobinhoodComms) February 8, 2023

The assets were seized following a court filing from cryptocurrency lending platform BlockFi to reclaim the shares, as Bankman-Fried and Wang used the shares as collateral to take out a loan from BlockFi.

Warnick told CNBC on Feb. 8 that Robinhood has been working with the DOJ on a plan to facilitate the buyback but nothing has been finalized yet.

The shares in question have been the subject of more than one dispute.

On Dec. 23, FTX asked the court to stop BlockFi from claiming the Robinhood shares, following the exchange’s collapse in November.

Meanwhile, although Emergent Fidelity didn’t file for bankruptcy in November like FTX and other FTX-affiliated entities, the firm did file for bankruptcy protection on Feb. 3.

Q4 crypto revenue falls

The United States-based trading platform saw cryptocurrency-based transaction revenues from its “Robinhood Web3 Wallet” fall 24% to $39 million in the fourth quarter, compared to the third quarter. Revenue in the third quarter fell 12%, compared to the second quarter.

Overall net revenues increased by 5% to $380 million in Q4 2022. However, the firm reported an overall net loss of over $1 billion in 2022.

The fall in crypto-related revenue comes despite the firm managing to roll out the Robinhood Web3 Wallet to more than 1 million waitlisted users over the quarter.

In just a few hours since the earnings report was released, Robinhood’s stock, tickered HOOD, is up 4.78%, according to Google Finance.

Robinhood not giving up on crypto despite Q3 crypto revenue slashing 12%

Coin Telegraph

The Robinhood CEO also announced the brokerage firm’s plans to expand the Robinhood Wallet internationally in the months to come.

Crypto and stock trading platform Robinhood highlighted lagging cryptocurrency revenue in the third quarter of 2022, though the results will do little to dampen its ambition to serve the market, its CEO says.

The trading platform announced its third-quarter results on Nov. 2, with the Robinhood executives pointing to a 12% quarter-on-quarter decrease in Monthly Active Users (MAU) and a 24% quarter-on-quarter drop in notional volume as two of the main drivers behind a 12% fall in crypto revenue, reaching $51 million.

In a results filing, the company attributed the fall in active users and trading volume as “customers continued to navigate the volatile market environment.”

Despite this, the company’s executives said it would continue investing its resources into the crypto space, including rolling out support for more cryptocurrencies, a new international retail-focused wallet and NFT-related features on its platform.

Robinhood rolled out the Beta of its Polygon-based Robinhood Web3 Wallet to 10,000 customers on Sept. 27, with more than 1 million on the waitlist. Robinhood also integrated Circle’s USD Coin (USDC) stablecoin a day later.

During the conference call, Robinhood’s CEO Vladimir Tenev said the firm is planning to offer the Robinhood Wallet to its international retail base in the months to come.

When asked about Robinhood’s plans for nonfungible tokens (NFTs), Tenev said they will likely integrate a feature to view and custody NFTs in the near future. However, connecting to NFT marketplaces didn’t appear to be on Tenev’s radar for the short term.

Tenev also noted that “customers have asked for Robinhood to add more blockchains to increase the breadth of coins available for them to swap and trade.”

While Tenev noted that several more coins were rolled out in Q3, he stressed that Robinhood would not compromise on its vision to become “the safest, most trusted” cryptocurrency service provider:

“We hope that customers understand and appreciate that we're moving carefully [...] Sometimes, that means moving a little bit slower than a lot of these other crypto companies. But we want to be extremely deliberate and to help protect customers and their money.”

Tenev also noted that Robinhood rolled out a free “Learn and Earn” cryptocurrency education program as a means to educate and retain a broader retail base over the long term.

As for Q4 2022, Robinhood’s said it will continue to make progress on its Robinhood Wallet, in addition to its Lightning Network integration.

Robinhood finished the quarter with a net loss of $175 million despite its total net revenue increasing 14% to $361 million. While its adjusted EBITDA was $47 million.

According to Investopedia, Robinhood’s net loss of $0.20 per share for Q3 2022 beat estimates.

Robinhood’s (HOOD) share price dropped 4.36% to $11.40 on Nov. 3, and is down 69.22% over the last 12 months, according to Yahoo Finance.

Quarterly Report