Aug 4 (Reuters) – Alphabet, Google’s parent company, said on Friday that it has cut its stake in Robinhood Markets by almost 90%, reducing its reliance on a financial app operator that is facing a slowdown in its core business.
Alphabet invested in Robinhood when it was a privately held startup that owned more than 4.9 million shares of the company as of the end of 2021.
That stake was worth nearly $419 million when Robinhood shares peaked at $85 in August 2021, just a month after the initial public offering.
After the sale, Alphabet now owns 612,214 shares of the company, worth about $7 million, according to Reuters calculations. As of Thursday, Robinhood stock is down 86% from its all-time high.
Robinhood is struggling to regain its footing after becoming a disruptive fintech app during the pandemic when several retail traders were drawn to its platform due to its user-friendly interface and zero fees.
The company’s platform also played a major role in the stock meme phenomenon in January 2021, when several traders banded together via social media to boost the value of heavily short stocks such as GameStop.
But the Federal Reserve’s tightening cycle hit equities last year, especially those of high-profile tech stocks in which there was a lot of retail interest, hurting Robinhood’s business.
Earlier this week, Robinhood said it had made a profit for the first time as a public company, surprising Wall Street, which had been expecting a small loss.
However, as retailers remained cautious, the platform’s monthly active users dropped to 10.8 million, down 1 million from the first quarter and 3.2 million from last year.
To counter weak operations, Robinhood tried to expand its revenue streams. In June, she negotiated the purchase of financial technology and credit card company X1.
(Reporting by Niket Nishant in Bangalore; Spanish editing by Ricardo Figueroa)