Robinhood shares soar 30% after Sam Bankman-Fried bought a $650 million stake

Sam Bankman-Fried, the billionaire founder and CEO of cryptocurrency exchange FTX, has acquired a sizable 7.6% stake in popular online broker Robinhood.

The news was well received by the market, with Robinhood’s (HOOD) share price initially soaring over 30% in after-hours trading. At the time of writing, the price has settled at a 24% overall gain.

Bankman-Fried Robinhood bought a total of $648 million worth of stock at an average price of $11.52, according to a securities filing filed with the Securities and Exchange Commission Thursday. The purchases disclosed by Bankman-Fried reportedly began in mid-March and continued through Wednesday.

In the securities filing, Bankman-Fried made it clear that he had “no intention to take any action to change or affect control of the company [Robinhood]’ and that the move was easy because he saw Robinhood as an ‘attractive investment’.

Robinhood’s communications team took to Twitter to mimic what Bankman-Fried said in his securities filing – tweeting to his 82,000 followers, “Obviously we think it’s an attractive investment too.”

The transaction was conducted by an Antiguan company called Emergent Fidelity Technologies Ltd, of which Bankman-fried is the sole director and majority owner.

The announcement appears to have brought some short-term relief to Robinhood investors after the share price hit a new all-time low of $7.73 on March 12, just a day after the brokerage firm announced that its crypto transaction revenue was up year-on-year 39% declined -year (YOY).

Robinhood has made significant strides in the cryptocurrency market as revenue from equity-related trading has drastically declined. Robinhood currently offers users crypto trading capabilities, putting it in direct competition with other US-based cryptocurrency exchanges such as Coinbase and Gemini.

According to Robinhood’s Q1 2022 report, about 18% of net revenue in Q1 came from crypto-related transactions, however, transaction-based cryptocurrency revenue fell 39% year-over-year to $54 million compared to $88 million in the first quarter of 2021.

Related: Robinhood cuts nearly 1 in 10 employees as stock hits all-time low

In April last year, Robinhood announced plans to expand into cryptocurrency brokerage through the purchase of British crypto company Ziglu.

Earlier this month, Robinhood also launched its highly-anticipated crypto wallet to 2 million waitlisted users, outlined plans to integrate the Lightning Network, and listed Shiba Inu (SHIB) after months of campaigning by its supporters.