Selling Your Company: A Complex Decision
Selling your company or not selling it is a complicated decision that involves various factors such as price, timing, pride, and others. It’s not uncommon for companies to face this dilemma, especially when their leadership team is involved. Zendesk, Twitter, and FTX are just a few examples of companies that have struggled with the decision.
A Crypto Exchange Circles Robinhood
Recently, Sam Bankman-Fried, CEO of crypto exchange FTX, has been rumored to be interested in buying Robinhood, a U.S.-based zero-cost broker. This move would be a significant step for FTX, as it would give them a large market share in the United States trading game and a user base that has a history of trading crypto.
Why Would a Crypto Exchange Want to Buy Robinhood?
So, why would a crypto exchange like FTX want to buy Robinhood? One reason is that Robinhood retains a significant user base, even though it may not be growing as rapidly as it once was. According to its Q1 earnings report, the company has 22.8 million ‘net cumulative funded accounts,’ up from 4.8 million on a year-over-year basis.
Comparing User Bases
While it’s difficult to directly compare user bases between companies like Coinbase and Robinhood, we can try to draw some directional comparisons. Coinbase had 9.2 million’monthly transacting users’ (MTUs) in the first quarter, which is significantly lower than Robinhood’s net funded accounts.
Is It a Large User Base?
While it may not be a direct comparison, it’s fair to note that we expect MTUs to work out to a fraction of net-funded accounts. Because Robinhood has net-funded accounts that are a multiple of the Coinbase MTU figure, it’s clear that Robinhood is large, at least in terms of its user base.
The History of Crypto Trading
One of the reasons why FTX might be interested in buying Robinhood is that its user base has a history of trading crypto. This could make them an attractive target for a company like FTX, which is looking to expand its market share and increase its user base.
Why Not?
So, what’s not to like about this potential deal? For one thing, it would be a significant step for FTX, giving them a large market share in the United States trading game. It would also give them access to a user base that has a history of trading crypto, which could help drive growth and expansion.
A Tasty Deal
While we may not have any IPOs to cover, this deal would be worth parsing. With FTX having a lot of money and Bankman-Fried already showing an appetite for Robinhood shares, it’s likely that this deal will come together soon.
The Exchange
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