Robinhood Clears Overhang with Share Buyback

Robinhood Markets has taken a significant step towards stabilizing its stock by repurchasing shares that were previously owned by Sam Bankman-Fried, the former CEO of the now-collapsed cryptocurrency exchange FTX. The announcement caused Robinhood's stock to rise by 3.2% in premarket trading on Friday.

In an official filing, Robinhood revealed that it had successfully completed a share purchase agreement with the US Marshall Service on Thursday. The broker disclosed that it had acquired over 55 million of its own shares from the agency for a total of $605 million.

This acquisition is particularly significant as the shares were formerly owned by entities controlled by Bankman-Fried, representing a sizable stake in Robinhood. The uncertainty surrounding the fate of these shares has been a concern for the company's stock, given that FTX is currently going through the bankruptcy process.

Bankman-Fried initially purchased a 7.5% stake in Robinhood back in May 2022 when he was still regarded as a key figure in the industry. However, just six months later, FTX collapsed into bankruptcy, leaving billions of dollars in customer funds unaccounted for and resulting in Bankman-Fried's arrest on charges of fraud. He has since entered a plea of not guilty.

This latest move by Robinhood to buy back its own shares is expected to have a positive impact on the company's stock and help to alleviate concerns about its future. With Robinhood's market capitalization currently just shy of $10 billion, this share buyback demonstrates the company's commitment to stability and growth.