KEY POINTS
- Alphabet made its investment in Robinhood when it was just an unlisted startup
- Google’s parent company held more than 4.9 million shares as of the end of 2021
- Alphabet shed nearly 90% of its Robinhood shares in August
Alphabet, the American multinational technology conglomerate that owns Google, has dissolved its stake in Robinhood, the crypto-friendly financial services company.
Alphabet shed its stake in Robinhood on Monday, according to Reuters. The news did not come as a surprise, as the former had slashed its stake in the company by nearly 90% in August.
The tech conglomerate reportedly made its investment in Robinhood when it was just an unlisted startup and held more than 4.9 million shares as of the end of 2021.
Just a month following Robinhood’s initial public offering (IPO), Alphabet’s stake was worth nearly $419 million, with the financial services company’s share peaking at $85 in August 2021.
Alphabet grew its shares over the past year, and held around 612,214 in the brokerage firm, which was worth around $7 million at the time.
However, Robinhood shares have nosedived from their peak levels by 86%, despite its breakout during the pandemic as the financial tech app, which attracted retail traders because of its easy-to-use interface and commission-free trades.
Robinhood missed the third-quarter revenue estimate by Wall Street and saw its shares plummet to over 9% in extended trading earlier this month.
The firm’s transaction-based revenue dropped by 11% year-on-year to $185 million, reporting a 13% plummet in equities, a 55% nosedive in cryptocurrencies and a 16% drop in its active monthly users to 10.3 million.
“If the current levels of securities lending and free credit balances continue, we anticipate Q4 net interest revenue will be roughly $20 million lower than Q3 levels,” CFO Jason Warnick said during a call with analysts.
It is worth noting that Robinhood has been in a rough spot since last year, primarily due to multiple interest rate hikes by the U.S. Federal Reserve.
Also, with numerous trading apps available these days, some of Robinhood’s customers lost interest, leading to a huge dip in its client base.
Robinhood was also embroiled in the controversial collapse of the then-crypto empire FTX since its founder Sam Bankman-Fried bought a 7.5% stake in Robinhood in May 2022.
Like all other businesses with links to the then crypto billionaire, Robinhood was negatively impacted by the collapse.
In September, Robinhood shares spiked by 3.2% after it reported it completed a share purchase agreement with the U.S. Marshall Service, buying over 55 million shares of its own stock from the agency for around $605 million.
The purchase agreement was a buy-back of the Robinhood shares that Bankman-Fried once owned. The U.S. Securities and Exchange Commission had also issued an investigative subpoena in December 2022 regarding its “cryptocurrency listings, custody of cryptocurrencies, and platform operations.”
