Robinhood to buy back shares worth $550 million worth of shares from FTX

• The 55 million Robinhood shares were seized by the Department of Justice in January following a dispute over ownership.
• The shares were being claimed by Sam Bankman-Fried, FTX's debtors, including BlockFi and the new FTX management as well.
• In Q4 2022, Robinhood noted a 24% decrease in transaction-based revenue from cryptocurrencies, with monthly active users declining by 800,000.

Robinhood announced its performance for the year-end quarter of 2022 and, at the same time, decided to put an end to a long-debated problem associated with its name. For the most part, Robinhood noted a similar performance as most of the other crypto companies in the bear market. 

Interestingly, the financial services company managed to perform better on the crypto front than it did on the equity front.

Robinhood takes its rightful back

Robinhood shares were a highlight of the FTX-Sam Bankman-Fried case. The 55 million shares were disputed as multiple parties claimed ownership of the equity. Bankman-Fried claimed it to be his as the shares belonged to Emergent Fidelity technologies, which the former CEO had a 90% claim in.

Other parties included BlockFi and the new FTX management team, which claimed that the shares belonged to the bankruptcy estate. However, the authorities put an end to the commotion very quickly by taking control of the money. The shares were requisitioned by the Department of Justice (DoJ), and Robinhood intends to take them back.

In its Q4 2022 report, Robinhood stated that it would buy back the shares that Emergent Fidelity had the claim to. Commenting on the same, Chief Financial Officer, Jason Warnick, stated,

"We continued to deliver on our product roadmap and kept our costs lean. On the capital management front, our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022. The proposed share purchase underscores the confidence the Board of Directors and management team have in our business."

Robinhood revenue declines in Q4

The Q4 earnings also reported a significant drop in financials that Robinhood observed over the course of the last three months of 2022. The revenue generated from cryptocurrencies dipped by about 24% to touch $39 million. And even though the Q-o-Q decline in crypto is high, the stock front observed higher losses. 

The equities trading on the platform observed nearly a 32% decline, generating only about $21 million. Thus the overall transaction-based revenue only fell by some 11% to rake in $380 million, maintaining minimal losses for the company.

---