Robinhood shares jump 14% on report FTX may be exploring a deal

FTX's Sam Bankman-Fried says no M&A talks with Robinhood
FTX's Sam Bankman-Fried says no M&A talks with Robinhood

Robinhood shares jumped on Monday after Bloomberg News reported crypto exchange FTX was considering acquiring the trading app.

The stock soared 14% to its session high and was briefly halted after a report that FTX was discussing a takeover plan internally, but no offer has been made to Robinhood, Bloomberg News reported, citing people familiar with the matter.

Sam Bankman-Fried, CEO of FTX, denied the report later Monday, however.

"We are excited about Robinhood's business prospects and potential ways we could partner with them, and I have always been impressed by the business that Vlad and his team have built," Bankman-Fried said. "That being said there are no active M&A conversations with Robinhood."

Robinhood declined to comment.

A woman's silhouette holds a smartphone with the Robinhood Markets logo in the background.
Rafael Henrique | Sopa Images | Lightrocket | Getty Images

Last month, Bankman-Fried took a 7.6% stake in Robinhood worth $648 million, according to a filing with the Securities and Exchange Commission. The filing said Bankman-Fried acquired the shares in the belief that they "represent an attractive investment."

Shares of Robinhood have dropped about 48% this year amid shrinking revenue and declining users. During the first quarter, its revenue fell 43% from a year ago to $299 million. Robinhood said its monthly active users declined to 15.9 million, down from 17.7 million a year ago.

FTX is one of the largest crypto exchanges in the world and offers derivatives products for more sophisticated traders as well as spot trading. FTX has become a rival to Coinbase and Binance.

In recent weeks, Bankman-Fried's companies signed deals to bail out small players in the crypto space. FTX agreed to provide crypto lender BlockFi with a $250 million revolving credit facility. Alameda, his quantitative trading firm, committed $500 million in financing to Voyager Digital, a crypto brokerage.

Robinhood attracted a huge number of retail investors during the pandemic trading boom, while the young broker also experienced success when it rolled out its crypto trading platform in 2018. Crypto trading has since become important for the company's bottom line when its stock trading activity slowed down.

Last fall, Robinhood said it was testing a crypto wallet and revealed that the waitlist for it had topped 1 million customers.