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Robinhood (NASDAQ:HOOD) closed the day down by 19% following the collapse of FTX Token (FTT-USD), the native token of FTX. The spiral of FTT lower has now affected the entire crypto market, with Bitcoin (BTC-USD) down more than 10% today. This has led to other crypto-related companies — such as Robinhood and Coinbase (NASDAQ:COIN) — sustaining heavy losses as well.
FTX’s CEO, Sam Bankman-Fried, also owns a 7.6% stake in HOOD stock, which he purchased for about $648 million earlier this year. The shares were purchased by Emergent Fidelity Technologies, a firm owned by Bankman-Fried. In June, the CEO was reportedly contemplating buying out Robinhood.
However, Mizuho Securities analyst Dan Dolev believes that HOOD stock’s decline is overblown. Dolev notes that Robinhood only derives about 14% of its revenue from crypto trading. According to Bloomberg, the analyst added:
“While the knee-jerk reaction is negative amid Sam Bankman-Fried’s ~8% stake, Robinhood’s exposure to crypto is small as the business remains diversified.”
Meanwhile, Ark Invest CEO Cathie Wood appears to be bullish on Robinhood as well, although a recent sale has some investors concerned. On Nov. 1 and 2, Ark exchange-traded funds (ETFs) purchased 373,863 shares of HOOD stock. Then on Nov. 4, Ark sold 277,519 shares. The investment firm currently owns 29.55 million shares across its ETFs, making it a top shareholder.
Wood’s sale may be a signal that she was unimpressed with Robinhood’s third-quarter earnings report, which was released on Nov. 2. For the period, revenue tallied in at $361 million, up 14% sequentially. Crypto transaction revenue totaled $51 million, down 12% sequentially. Furthermore, the company remains unprofitable, reporting a net loss of $175 million.
5 Investors Still Betting Big on HOOD Stock
Tracking institutional ownership is important, as these large investors provide liquidity and support for stocks. During Q2, 302 13F filers reported owning HOOD stock, an increase of 29 filers from the prior quarter. In addition, the institutional put/call ratio sits at 1.04, up from 0.76 during Q2. That’s equivalent to 27.29 million calls and 28.32 million calls, implying a neutral options stance. With that in mind, let’s take a look at the top five shareholders:
- Index Venture Associates: 72.33 million shares or 9.53% ownership.
- Galileo: 58.06 million shares or 7.65% ownership.
- Sam Bankman-Fried/Emergent Fidelity Technologies: 56.27 million shares or 7.6% ownership.
- Vanguard: 43.80 million shares or 5.77% ownership.
- Ribbit Capital: 26.48 million shares or 3.49% ownership.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.