Robinhood Engages In Buyback To Salvage Assets From FTX

Robinhood is a renowned trading and investing platform. This exchange mainly offers services in traditional instruments, like stocks and commodities. Its commission-free model has made it quite popular among traders. Moreover, the platform is now extending its portfolio with digital assets. Besides, it has taken a rather bold step to make this happen.

Robinhood’s Foray Into Crypto With Buyback

Robinhood has recently made a big announcement. It made the information public about its share repurchase agreement/buyback. It will buy back shares worth $605 million from FTX’s emergent Fidelity Technologies. Reportedly, the exchange has filed an 8-K with the SEC. 

For the uninitiated, 8-K is an official report of the current ongoings of the company. Companies do it to apprise shareholders of their recent actions. Notably, Robinhood expressed its interest in buyback earlier this year. It took them a little longer to substantiate that decision.

The New York court approved this step and involved the United States Marshal Service for that. The latter represented the government and facilitated the purchase of 55 million shares. At the time of buying, each share cost $10.96. 

Robinhood’s CFO “Jason Warnick” talked to the media after the completion of the process. He said that it’s a crucial step for the company’s future. It will strengthen the faith of the customers and shareholders in the organization. It is crucial to understand that Fidelity Technologies bought these shares in May 2022. It filed for bankruptcy shortly after that purchase. 

A Little Peep Into the Background

During its fourth-quarter earnings announcements, Robinhood divulged that step. It said that all the board of directors have unanimously supported this move. At the same time, it also expressed that it is unsure when the buyback may happen. The company said there haven’t been many instances of such share repurchases so far. 

Although Robinhood wasn’t the only organization interested in the buyback. Several companies showed interest, but eventually, the exchange grabbed the deal. Furthermore, Bankman-Fried tried to retain the shares. Officials forfeited them from doing so in January 2023. 

Robinhood and Emergent became a part of the news in December last year. BlockFi, a digital asset lender sued Emergent for trying to seize Robinhood shares. Emergent said that these shares were collateral given by Alameda. 

How are the Markets Reacting to the news?

Markets have seen the aftermath of FTX’s collapse to a huge extent. Many exchanges and crypto firms have suffered due to the FTX Scandal. Despite that, some firms are making an impressive recovery. Robinhood, being a well-established exchange, wasn’t affected at all! 

Through this buyback, Robinhood has taken a big step. It has also shown some possibilities to the rest of the companies in this space.  This buyback will give a strong footing to the exchange. The investors and experts are confident about this deal. According to them, it would enable Robinhood to undertake more of such endeavors. 

Essentially, it is giving a strong message to the markets about the incidents like FTX collapse.

Steve Anderrson
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