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.”

Of course, we also consider it an attractive investment. We have the best customer base, launch great new products and we have the team to deliver.

— Robinhood Comms (@RobinhoodComms) May 12, 2022

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.