Is Investing in Robinhood Worth Your Time?

Since the news surfaced that Robinhood (HOOD) had acquired a high-profile investor, the price of crypto equities like Bitcoin (BTC) and its pals has risen.

To say Sam Bankman-Fried is a crypto star is an understatement. 

He invented the trading software FTX (FTT) and now ranks first on CoinTelegraph's Hot 100 list. 

According to his SEC filing, which was published on Thursday by Street Insider, "SBF" had amassed around 30 million shares of HOOD since the middle of March.

According to The Financial Times, it's estimated to be worth $648 million, or 7.6 percent of Robinhood's equity. 

As HOOD's share price has fallen over the last several months, Bankman-Fried has purchased even more of the company's stock. 

On Wednesday, he bought 3.2 million shares at a price close to the all-time low – his most recent transaction.

Shares in Robinhood Markets, Inc. will be held as an investment by Bankman-Fried, according to the filing, and;

"intend[s] to hold the Shares as an investment, and do[es] not currently have any intention of taking any action toward changing or influencing the control of"

At 63 percent of Robinhood, its co-founders retain control, and SBF has just a 2.8 percent voting share; this makes logical.

Bankman-Fried says he's "open to any talks" about using any of his $21 billion wealth to acquire Robinhood. 

Just "something that I regarded as an interesting investment, and there are a lot of places for the firm to develop and expand to move ahead," 

SBF tells Axios about Robinhood at this stage.

Is there any truth to this assertion? We can see the potential with new statistics on Robinhood and related firms. Thank goodness for investors with less than $21 billion to invest in.

More than 5 million registered users on Sam Bankman-FTX Fried's app. 

However, more than 23 million people use Robinhood as of its most recent earnings report, which was released two weeks ago. There must be a large number of these traders:

With just $54 million in income from cryptocurrency trading and only $36 million from stock trading, Robinhood generated $127 million in Q1 from options trading. 

Year-over-year, these numbers all fell significantly. 

Options income decreased 36 percent, which was at least better than -39 percent for crypto and -73 percent for stocks trading on Robinhood.

Sam Bankman-Fried regards options trading as a strong and reliable business. 

According to The Block in April, Goldman Sachs may soon "advise FTX on the latter's aim to provide retail trading of crypto derivatives," which FTX has been pursuing.

To summarize, the number of people using Robinhood has been very stable. 

Since last spring, the total number of accounts has been between 22.5 and 23 million. 

But Assets Under Custody decreased sequentially to $93 billion, which is still in the $95–100 billion area it has been in since the beginning of the year.

Even while Monthly Active Users have fallen to 15.9 million, they're still considerably over 2020. 

The average revenue per user (ARPU) is gradually dropping, even though the firm is still profitable.

Robinhood's Net Revenues have dropped from $565 million in Q2 2021 to barely $299 million presently.

But ARPU is not in line with the 2020 projections! For the first time, Robinhood's ARPU is lower than it has ever been before. 

Until recently, ARPU was $98 per user. Even if costs are still high, this is all taking place. Because of this, EBITDA's net loss is the largest ever.

Commercialization is the issue at hand.

Hence, we've heard a lot about Robinhood's efforts to broaden its products, including crypto wallets, a reward debit card, securities lending, and the Lightning Network interface for bitcoin payments.