Wall Street: Crypto billionaire eyes Robinhood

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Hi, Aaron Weinman here. Sam Bankman-Fried, the crypto billionaire who's known to get by with four-hours sleep, has set sights on Robinhood.

While a deal is far from certain, Wall Street could do with some blockbuster M&A.

Let's unpack it.

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Sam Bankman-Fried FTX founder crypto exchange

1. Sam Bankman-Fried's crypto platform FTX is eyeing a deal for Robinhood, Bloomberg reported on Monday. Robinhood's share price soared more than 20% following the report that Bankman-Fried may acquire the firm.

Robinhood hasn't received a formal takeover offer from FTX, and Bankman-Fried wrote in an emailed statement that "no active M&A conversations with Robinhood" were taking place, according to Bloomberg.

Bankman-Fried has also denied claims that FTX is open to acquiring Robinhood, telling TechCrunch that FTX is instead keen to partner with the app-based brokerage. He did, however, purchase a 7.6% stake in Robinhood last month.

Robinhood's valuation has dwindled — like many fast-growing tech companies that thrived in the early stages of the pandemic — as inflation, rising rates, and weaker corporate earnings have dented equity markets.

Analysts and investors detailed the pros and cons regarding an acquisition of Robinhood. A deal would boost Wall Street's investment banks, which are combating a slump in M&A and IPO deal volumes.

The trading app's shares have dipped about 48% in value this year, and revenue dropped 43% year-on-year to $299 million at the end of the first quarter.

Robinhood is also stacked with about $9.5 billion in debt, against roughly $6.1 billion in cash, the Financial Times' Alphaville noted. And much of its debt comes with change of control clauses — relating to a change in ownership — a tricky factor in takeover negotiations.

Here's some recent stories on Robinhood, including a peek at the congressional report that detailed chaos inside the company during the meme-stock trading frenzy, information on company layoffs, and employee claims of product delays and an overly cautious legal team.

In other news:

Rich Handler

2. Jefferies is the latest bank to vow to cover staffers' abortion-related travel. See the memo obtained by Insider, here. For more on Wall Street's reaction to the SCOTUS' decision, check out this rundown. Jefferies — often considered a bellwether for earnings because it unveils results earlier than its peers — also reported higher-than-expected revenues for the second-quarter.

3. A former Angelo Gordon exec was accused of sexual assault. The plaintiff is a former marketing director at Angelo Gordon's direct-lending subsidiary Twin Brook. She said she was raped by the unit's co-founder in 2017. The former exec has sought to get her claims dismissed.

4. Crypto hedge fund Three Arrow Capital has defaulted on a $670 million loan. The debt, which includes bitcoin and stablecoin, comes after 3AC saw a tranche of its positions liquidated by BlockFi and Genesis.

5. Brandon Sim, an emerging quant, quit Citadel Securities without a plan. Now he's running a billion-dollar firm that's building the Shopify for family doctors. Sim is the latest in Insider's series highlighting top quant-trading experts that ditched the Street for startups.

6. Private bankers leverage toys like yachts and jets to lend to the ultra wealthy. Three bankers shared with Insider how they built their careers on loans backed by luxury items. Some bankers, however, can get into strife when their clients fall short of "Know Your Customer" standards.

7. Venture-capital funds are veering away from investments in capital-intensive businesses. Eight fintech VCs, including TCV and Lightspeed, offered their predictions for the rest of the year.

8. Fintech Ramp is tracking where its customers cut back and increased their spending. The startup, which offers corporate cards and software for employee expenses, details how small businesses are changing their spending habits.

9. Peter Thiel and Google Ventures-backed TMRW is the latest startup to cut staff. The fertility firm that's working to digitize the egg-freezing process said farewell to about 20 employees in May as the tech world adjusts to a world of lower valuations and costly capital.

10. The Great Resignation has forced companies to radically rethink how they evaluate managers. And for some: Most bosses are terrible. So it begs the question — what does your boss do all day?

Deals and moves:

  • KKR has sold garage-door maker C.H.I. Overhead Doors to Nucor Corporation. Goldman Sachs and UBS advised the private-equity firm, while Kirkland & Ellis was legal counsel.
  • MUFG has hired two directors in its leveraged-finance platform. Garret Rowan will join as the head of the leveraged-loan trading group, and Mike Macchia will be a salesperson in leveraged-finance sales. Both New York-based bankers joined from UBS.

Curated by Aaron Weinman in New York. Tips? Email aweinman@insider.com or tweet @aaronw11. Edited by Lisa Ryan (tweet @lisarya) in New York and Hallam Bullock (tweet @hallam_bullock) in London.

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