Alphabet Inc., Google‘s parent company, has sold all of its holdings in Robinhood Markets, according to a Nov. 9 13F-HR filing.
The firm reported 0 Class A shares in Robinhood (US:HOOD) as of Sep. 30, 2023, down from 612,214 shares from its previous filing on Aug. 4.
Robinhood, which is known for commission-free trades and a user-friendly interface, had previously received a significant early investment from Alphabet. However, Alphabet’s decision to sever ties with Robinhood is the result of progressive reductions in its stake, with a drastic, nearly 90% cut made in prior months.
According to Reuters, Robinhood’s market appeal began to decline due to the Federal Reserve’s rate hikes, resulting in unfavorable economic conditions. This, coupled with a slowdown in trading, led to the app falling short of Wall Street estimates for revenue in its third-quarter earnings report. As a result, Robinhood’s customer base appeared less active.
Despite challenges with revenues, Robinhood has been moving forward with strategic growth plans. It recently announced plans to introduce cryptocurrency trading in the European Union following regulatory approval. This EU crypto launch is part of the firm’s broader growth strategy and will follow the imminent launch of brokerage services in the UK.
However, all of these ambitious expansion plans come with their own challenges. The trading app’s cryptocurrency transaction revenue fell 55% year-on-year to $23 million in Q3 2023. Yet, despite this dip, Robinhood remains committed to offering crypto products internationally to expand its customer base.
Additionally, Robinhood’s involvement in the cryptocurrency market is significant. According to a report by Arkham Intelligence, Robinhood held the fifth-largest account on the Ethereum blockchain and the third-largest Bitcoin address, which holds more than $4.3 billion in Bitcoin.
The company has also successfully reacquired its own shares that had been purchased by Sam Bankman-Fried. On Sep. 1, 2023, Robinhood struck a deal with the U.S. Marshal Service to repurchase shares seized from Bankman-Fried’s Emergent Fidelity Technologies for $605.7 million. This deal came after the U.S. government had taken custody of Bankman-Fried’s Robinhood shares when FTX and Emergent filed for bankruptcy protection the previous year.