The parent company of Google, Alphabet has made a pivot, slashing its stake in Robinhood Markets by nearly 90%.
This move comes on the heels of Robinhood’s recent announcement of its maiden profit as a public entity.
Robinhood, once the shining star of fintech during the pandemic, captured the attention of retail traders with its accessible interface and commission-free trading.
However, the tides turned with the Federal Reserve’s tightening cycle last year, which cast a shadow over equities and especially tech stocks, impacting Robinhood’s trajectory.
The company’s shares, which took center stage in the meme stock frenzy of January 2021, plummeted by 86% since their peak in August of the same year.
Despite a surprise profit of 3 cents per share in the second quarter, Robinhood’s monthly active users dwindled to 10.8 million.
This marked a drop of one million from the previous quarter and 3.2 million from the previous year, as retail traders exercised caution amid market volatility.
Addressing this challenge head-on, Robinhood is diversifying its revenue streams by acquiring financial technology and credit card firm X1 for approximately $95 million.
Alphabet’s regulatory filing revealed a notable shift, with its Robinhood shares plummeting from 4.9 million in the first quarter to around 612,214 by June 30.
This reduction places Alphabet’s stake at a value of approximately $7 million based on Robinhood’s recent closing price.
As Alphabet adjusts its investment strategy, the spotlight turns toward Robinhood’s innovative efforts to navigate these changing financial currents.
