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Crypto trading platform Robinhood saw a significant decline in revenue in the last quarter of 2022. The crypto company reported trading revenue of $39 million in the fourth quarter of 2022, down 24% from $51 million in the third quarter, according to a recent report.
We have announced our financial results for the fourth quarter. For information on our performance, please visit https://t.co/3l82Sx3F7d
— Robinhood Comms (@RobinhoodComms) February 8, 2023
After the beta release of the Web3-based Robinhood Polygon wallet in September 2022, the Robinhood crypto wallet will be available to more than one million consumers on the waiting list. While analysts had expected Robinhood to lose 15 cents in the fourth quarter, the company lost 19 cents a share after adjusting for a one-time charge on revenue of $380.0 million, according to FactSet data.
In Robinhood after-hours trading Wednesday, the company's shares rose nearly 3 percent to $10.80. The stock is up about 30% year-to-date, but is down about 20% year-to-date.
Robinhood wants to buy Bankman Fried stock
In May of last year, the company announced a board resolution to authorize the purchase of all or all of the 55 million shares that parent company Emergent Fidelity Technologies had purchased for former FTX CEO Sam Bankman . He also reduced his stock compensation to $500 million.
Just in: Robinhood agrees to buy Sam Bankman-Fried's stake for $579 million.
Robinhood is working with the DOJ on the plan, but cannot guarantee if or when it will happen.
— Quiver Quantitative (@QuiverQuant) February 8, 2023
According to Robinhood, the company's board In May 2022, the parent company approved a strategy to buy back all or part of the 55 million shares it bought for former FTX CEO Sam Bankman-Fried. The stock holds more than 7 percent. capital.
For this, the company contacted the Department of Justice, but "there is no guarantee if and when the plan will continue." Specifically, 55 million shares are at the center of a battle between international and local official organizations, including Bankman-Fried and the crypto-lender BlockFi.
According to US Department of Justice (DOJ) filings for January, Bankman-Fried held 55,273,469 HOOD shares. Specifically, the DOJ took its stake in Robinhood.
DOJ formally seizes more than $456 million worth of Robinhood stock tied to FTX founder Sam Bankman-Fried
— TheGloryHodl (@TheGloryHodl) February 8, 2023
The former CEO of FTX bought an equity stake of up to 7.6% of Robinhood's capitalization in May last year.
The stock purchase had an initial price of $649 million when Emergent Fidelity Technologies was purchased on behalf of Bankman-Fried. However, as of Wednesday, February 8, the shares were valued at more than $578 million.
Bankman-Fried oversees Emergent Fidelity as its sole director and owns FTX co-founder Gary Wang. According to court documents, the two executives took out direct loans from Alameda Research to facilitate the stock purchase.
"We believe this acquisition will have a positive impact over time and avoid any disruption for shareholders," Robinhood CEO Vlad Tenev said in a statement. The company's balance sheet is over $6 billion in cash. Robinhood notes:
The proposed share purchase highlights the confidence our board and management team have in our company.
Jason Warnick, Robinhood's CFO, had the following to say on this issue.
The board gave us permission to buy it, so we're talking to the DOJ. It is difficult to say exactly what the schedule will be.
Even so, Robinhood promised to provide "reasonable updates" on the share buyback in its earnings report.
A system error cost Robinho $57 million in one day in the fourth quarter
Also in Robinhood's fourth-quarter earnings report, a bug in the company's systems allowed app users to place bets that cost the company $57 million a day in the fourth quarter.
A “bug” in the system that allowed users to sell shares caused #Robinhood to lose $57 million in one day.
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— N4BT (@News4BlockTech) February 9, 2023
A quote from CFO Jason Warnick during Robinhood's earnings call on Wednesday:
A processing error caused us to short the inventory in the market and, although quickly identified, resulted in a loss of $57 million when we repurchased this inventory at market value.
This problem caused customers to run out in December, which ended up costing the company a fortune.
In the year It is worth noting that this is not the first time that Robinhood Systems has had a system problem, after an incident in 2019 that allowed users to trade shares with borrowed funds.
A flaw in Robinhood's system allows users to trade stocks with over-leveraged funds, giving them access to free funds https://t.co/1GAccIu5ue
— Bloomberg (@Business) November 5, 2019
In the latest event, Nasdaq-listed healthcare company Cosmos Health introduced a 1:25 stock dividend on December 16 . Similarly, the company will change its name to Cosmos Holdings, which means that 25 shares of the company will be converted into one share.
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