Google parent Alphabet said on Friday it had cut its stake in Robinhood Markets by nearly 90%, days after the trading app said it was profitable for the first time as a public company.
Robinhood has been struggling to regain its footing after becoming a groundbreaking fintech app during the pandemic, when some retail traders were drawn to its platform for its commission-free trading and easy-to-use interface.
The Fed’s tightening cycle last year hammered stocks, particularly retail interest in soaring tech stocks, denting Robinhood’s business.
The company’s trading platform sparked a meme stock frenzy in January 2021, with the company’s shares down 86% since peaking in August of the same year.
Earlier this week, Robinhood said it earned 3 cents (nearly 0.12 rupees) per share in the second quarter, while analysts expected a loss of 1 cent (nearly 0.01 rupees), according to Refinitiv data.
However, as retail traders remained cautious due to volatile market conditions, the platform’s monthly active users decreased to 10.8 million, a decrease of 1 million from the first quarter and a decrease of 3.2 million from last year.
In response to this weakness in its main trading business, Menlo Park, Calif.-based Robinhood is looking for new revenue streams. In June, it agreed to acquire financial technology and credit card company X1 for about $95 million (nearly Rs 787 crore).
Alphabet said in a regulatory filing that it owned about 612,214 shares of Robinhood as of June 30, compared with 4.9 million shares in the first quarter ended March 31.
Alphabet’s stake was worth just $7 million (nearly 570 crore rupees) as of Robinhood’s last close on Thursday, according to Reuters calculations.
© Thomson Reuters 2023
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