Robinhood Soars in Afterhours Trade After FTX Owner Takes 7.6% Stake
Investing.com
Published May 12, 2022 04:47PM ET
Updated May 12, 2022 05:05PM ET
By Yasin Ebrahim
Investing.com -- Robinhood jumped in afterhours trading Thursday after Sam Bankman-Fried, the chief executive of crypto exchange FTX, acquired a 7.6% stake in the trading platform, according to a Thursday filing with the Securities and Exchange Commission.
Robinhood Markets Inc (NASDAQ:HOOD) was up more than 20% in afterhours following the report.
Emergent Fidelity Technologies, which is owned by Bankman-Fried, invested about $648.3 million in Robinhood, according to the filing.
Robinhood has been struggling to replicate the growth seen in the pandemic, when the trading platform become a hit with young first-time stock traders. In its latest report, the company reported a loss of 1 million users and a 73% dive in equities trading revenue.
The trading platform has taken measures including cutting a chunk of its workforce to lower costs and steady growth. The cost-cutting initiatives are expected to bear fruit in the near future.
"[W]e think sustainable profitability is still at least a year away, and investors will likely want to see tangible progress before warming back up to the stock," Deutsche Bank said in a note following Robinhood's quarterly results released in late April.
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