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Robinhood’s Tenev says the retail brokerage firm isn’t thinking about selling itself despite struggles

Vlad Tenev, CEO and co-founder Robinhood Markets, Inc., is displayed on a screen during his companys IPO at the Nasdaq Market site in Times Square in NEW YORK, U.S., July 29, 2021.

Brendan McDermid | Reuters

Robinhood CEO Vlad Tenev said Wednesday that the retail brokerage isn’t seeking to be acquired despite announcing major layoffs after another quarter of shrinking active users.

“In a single word: No,” Tenev said on an investor call when asked about potentially being bought by another firm. “I believe we’re in an excellent position as a stand-alone company. I really like us as a stand-alone company.”

IN-MAY, FTX CEO Sam Bankman-Fried revealed a stake in Robinhood, spurring speculation in regards to a potential takeover bid from the crypto-focused brokerage. Bankman-Fried has since said FTX isn’t thinking of buying Robinhood outright.

Tenev did say that Robinhood was searching for potential acquisitions of its. The business reported $6 billion in cash on its balance sheet by the end of the quarter.

“We actually see opportunities, particularly in the forex market environment, to leverage the total amount sheet that people have … to obtain companies that accelerate our roadmap,” Tenev said.

The Robinhood investor call came each day following the company announced it had been laying off 23% of its workforce. The business also reported a smaller-than-expected loss for the next quarter, but monthly active users declined and revenue was down a lot more than 40% year over year.

Shares of Robinhood rose 11.7% on Wednesday following layoff announcement. Several Wall Street analysts said the company’s cost-cutting efforts is actually a boost to the stock.

Robinhood cut its full-year expense guidance by roughly $290 million, which include about $70 million decline in expected share-based compensation. Tenev said that the business plans to possess positive adjusted EBITDA a way of measuring profitability that excludes certain costs such as for example interest and taxes by the finish of the entire year.

The business pointed to rate hikes from the Federal Reserve as a way to obtain revenue growth by means of interest. CFO Jason Warnick estimated that each one-quarter of a share point rate hike results in about $40 million of annualized revenue for Robinhood.

“The complete advantage of rate hikes depends on how balances and customer rates vary as time passes,” Warnick said.

The CFO also said Robinhood’s assets under custody rose back above $70 billion in July after declining in the next quarter.

Despite Wednesday’s rally, Robinhood’s stock continues to be down nearly 42% for the entire year and much more than 70% from where its IPO was priced this past year.

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