Aug 4 (Reuters) – Google-parent Alphabet (GOOGL.O) said on Friday it had reduced its stake in Robinhood Markets (HOOD.O) by almost 90%, decreasing its exposure to the trading app operator that has been dealing with a slowdown in its primary business. Alphabet had reportedly invested in Robinhood when the latter was an unlisted startup, and it held over 4.9 million shares in the company as of the end of 2021. That stake was worth nearly $419 million when Robinhood shares reached their peak of $85 in August 2021, just a month after the initial public offering. Following the sale, Alphabet now owns 612,214 shares in the company, valued at about $7 million, according to Reuters calculations. As of Thursday, Robinhood shares have declined by 86% from their record levels. Robinhood has been struggling to recover after emerging as the breakout financial technology app during the pandemic, when several retail traders were attracted to its platform because of its commission-free trades and user-friendly interface. The company’s platform also played a significant role in fueling a meme stock frenzy in January 2021, when several traders joined forces on social media to drive up the value of heavily shorted stocks like GameStop (GME.N). However, the Federal Reserve’s tightening cycle last year negatively impacted shares, particularly those of high-flying technology companies that had a lot of retail interest, hurting Robinhood’s business. Earlier this week, Robinhood announced that it had achieved profitability for the first time as a public company, surprising Wall Street, which had expected a small loss. However, as retail traders remained cautious, monthly active users on the platform decreased to 10.8 million, 1 million fewer compared to the first quarter and 3.2 million fewer than last year. To counter the weakness in trading, Robinhood has been seeking to expand its revenue streams. In June, it agreed to acquire financial technology and credit card firm X1. Reporting by Niket Nishant in Bengaluru; Editing by Nivedita Bhattacharjee and Anil D’Silva
Source from www.reuters.com