By Sam Boughedda
FTX, the crypto exchange founded by Sam Bankman-Fried, is said to be exploring the possibility of whether it could acquire Robinhood Markets Inc (NASDAQ:HOOD).
Bloomberg, citing people with knowledge of the matter, said FTX is speaking internally about how it could buy the app-based, primarily stock brokerage. However, they have made no takeover approach, and no final decision has been made.
Bloomberg said Bankman-Fried wrote in an emailed statement that they are "excited about Robinhood's business prospects and potential ways we could partner with them," but there are "no active M&A conversations with Robinhood."
In May, a company Bankman-Fried controls, Emergent Fidelity Technologies revealed it had acquired a 7.6% stake in Robinhood.
During the pandemic, Robinhood thrived as retail investors and traders flooded its platform. However, it has struggled since, and its shares are down significantly since its debut in 2021.
Nevertheless, today's report has resulted in a 17% jump in its stock price.
Mizuho analyst Dan Dolev sees the potential deal news as good news for Robinhood, but also said the company can make it on its own.
"We believe that a potential deal would be good news for HOOD as it helps expand its reach and breadth," Dolev said. "We also believe that HOOD can survive, and thrive on its own." He rates the shares a Buy with a $14 price target.
Earlier in the day, Goldman Sachs analyst Will Nance upgraded Robinhood from Sell to Neutral with a price target of $9.50. The analyst notes are now trading at an ~$6.5bn market cap versus its cash position of ~$6.2bn and tangible book value of ~$7bn. Further, the rising interest rates should significant acceleration net interest income over the next several quarters and help reduce Robinhood's losses.