Robinhood Stock Surges as It Tightens Link to Crypto With Investment From FTX Co-Founder

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Robinhood shares jumped after hours Thursday.

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Shares of Robinhood were surging Friday after a filing revealed that Sam Bankman-Fried, a co-founder of crypto exchange FTX, bought a large stake in the retail stock brokerage.

The stock was rising 20.7% in premarket trading Friday to $10.33.

Robinhood (ticker: HOOD) stock had hit a 52-week low on Thursday as enthusiasm for trading through the brokerage waned. It is famous for the meme-stock stock trades that sent companies like GameStop (GME) and AMC (AMC) on a wild ride last year. The company also is expanding ways to help investors to trade crypto with digital wallets.

“It is unclear what Mr. Bankman-Fried’s intentions are in taking the position,” Piper Sandler analysts Richard Repetto and Patrick Moley wrote in a note. However, his “reputation and knowledge of cryptocurrency markets/exchanges could benefit HOOD as they work on bolstering their crypto offering.”

Piper Sandler rates Robinhood shares at Neutral with a price target of $11.

The filing with the Securities and Exchange Commission announcing that Bankman-Fried had taken a 7.6% stake in Robinhood was disclosed after the markets closed Thursday. It stated that Bankman-Fried sees Robinhood as a “good investment” and that he may review options for increasing shareholder value or acquire more shares himself.

FTX is one of the biggest exchanges for trading digital assets, competing with Coinbase (COIN) and Binance.

Write to brian.swint@barrons.com