Samuel Bankman-Fried, the chief executive and founder of cryptocurrency exchange FTX, revealed a 7.6% stake in Robinhood Markets Inc on Thursday, capitalizing on the weakness of the shares of the trading app to build a position.
Bankman-Fried said in a regulatory filing he did not have any intention of taking control of Robinhood. The company's dual-class shares currently give Robinhood's founders control of 64% of the voting shares outstanding.
A person familiar with the matter said that Bankman-Fried had not informed Robinhood of any plans to merge it with his FTX platform.
Bankman-Fried said in the filing that it was possible that his position may evolve and he could end up pushing for changes. He disclosed he started building his stake in Robinhood in the middle of March. According to a filing with the Securities and Exchange commission, he now owns more than 56 million shares, which he purchased for more than $648 million.
Shares of Robinhood were up more than 27% in after-hours trading following the disclosure, as investors cheered Bankman-Fried's show of confidence in the beaten-up stock. The company has struggled to meet Wall Street expectations since its IPO last year.
Robinhood's communication team tweeted that they agree with Bankman-Fried that the company is "an attractive investment."
"We have the best customer base, are introducing great new products, and we have the team to deliver. Our journey is just beginning," the team said.
FTX, which Bankman-Fried co-founded in 2019, was valued at $32 billion in a February funding round, and Bankman-Fried himself is worth $21 billion, according to Forbes.
Like many tech start-ups, Robinhood has yet to turn a profit, but even still, its earnings have disappointed investors. The company reported a 43% decline in first-quarter revenue along with a decline in monthly active users in April.
(Reporting by Greg Roumeliotis in New York and Hannah Lang in Washington; Editing by Lisa Shumaker)