Robinhood Plunges as Bankman-Fried’s FTX Sells Itself to Binance

(Bloomberg) — Robinhood Markets Inc. tumbled by probably the most in additional than a yr after Binance Holdings Ltd. agreed to amass Sam Bankman-Fried’s troubled crypto alternate FTX.com, which had been thought of a possible suitor for the buying and selling platform.

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Shares of Robinhood plunged as a lot as 16% Monday, their steepest decline since August 2021, after the founders of Binance and FTX.com introduced that they’ve signed a non-binding letter of intent on the takeover to “assist cowl the liquidity crunch” at FTX.com.

Traders might have soured on Robinhood after the announcement as FTX was mentioned to have been exploring a attainable acquisition of the corporate, individuals with information of the matter instructed Bloomberg Information in June.

“Whereas the knee-jerk response is unfavourable amid Sam Bankman-Fried’s ~8% stake, Robinhood’s publicity to crypto is small because the enterprise stays diversified,” Mizuho Securities USA analyst Dan Dolev wrote in a report.

Coinbase World Inc. additionally tumbled as a lot as 14% on issues that the Binance-FTX deal places a highlight on the challenges dealing with the $1 trillion crypto trade.

“The fast fall from grace of a crypto alternate demonstrates how fickle the crypto trade may very well be,” Dolev wrote. “It is a pink flag for Coinbase, the place the overwhelming majority of revenues are from buying and selling crypto tokens with little diversification elsewhere.”

Different cryptocurrency-linked shares are sliding Tuesday as Bitcoin sinks under $19,000 for the primary time since Oct. 21 amid investor jitters. MicroStrategy Inc. sank 21% and Riot Blockchain Inc. misplaced 14%, whereas Marathon Digital Holdings Inc. fell 12% and Silvergate Capital Corp. dropped 20%.

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–With help from Bailey Lipschultz.

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