Robinhood shares fell by 14 percent, on Tuesday after the FTX fallout. FTX founder Sam Bankman-Fried has a roughly 7.5 percent stake in Robinhood, making him one of the company’s large shareholders. Crypto exchange Binance proposes to takeover FTX, which is suffering from a liquidity crunch.
According to the Wall Street Journal, on Tuesday, Dan Dolev, a managing director at Mizuho Securities wrote a note to clients that said, “Investors may question the future of SBF’s” stake in the company as Bankman-Fried had purchased a large number of Robinhood stocks in Robinhood Markets Inc., in May 2022, according to a regulatory filing, as reported by the Journal.
Mr Dolev also noted that Robinhood generated only about 14 percent of its revenue from crypto token trading. This made it more diversified than Coinbase.
In another report Bloomberg reported that Robinhood customers were given access to 23 IPOs all of whose stocks fell by double-digits. One of these stocks included Robinhood. The analysis by Bloomberg of the company’s program IPO Access indicates that “it has been a flop for investors, so far.”
Bloomberg reported that users bought “buzzy companies” shares including Sweetgreen Inc. and Allbirds Inc. before the companies’ IPO debuts. Customers who still hold the shares have faced losses. The outlet also added that all IPOs offered by Robinhood underperformed at the stock exchange and five of the 23 companies offered by Robinhood saw an at least 89 percent decline in their value.
According to Bloomberg, Robinhood’s public offering has also not done well. Shares were sold to more than 300,000 users at $38 per share. The outlet says that those who have kept the shares have received a beating as the stock fell by 10 percent and was at $10.98 at 10:15 a.m. in New York, on November 8, 2022, as per the outlet. This indicates that the decline is about 72 percent since its IPO, in July 2021.
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