Banyan - September 2023

Alphabet Sheds Entire Stake in Trading App Robinhood


Google parent Alphabet has sold off all of its shares in trading app Robinhood.

The tech giant in August had sold about 90% of its stake in Robinhood, and said in a recent filing with the Securities and Exchange Commission (SEC) that it had dissolved its holdings. Alphabet also sold off its holdings in rideshare service Lyft.

The sale was first reported by Reuters Monday (Nov. 13), with the news outlet also noting that Alphabet had invested in Robinhood before the latter company went public, but after the platform had caught the notice of retail traders.

More recently, Robinhood has struggled amid rocky macroeconomic conditions and a sustained period of higher interest rates.

The company has seen its base of monthly active users (MAUs) shrink, announcing in September that that figure came to 10.6 million in August, down from 13.3 million during the same month in 2022.

Last week, Robinhood reported earnings that showed a 55% drop in crypto trading revenues in the quarter ending Sept. 30, compared to the prior year.

“This decline in revenues is significant, considering the increasing popularity of cryptocurrencies and the growing interest in crypto trading among investors,” PYMNTS wrote.

But despite this increase, the company’s total net revenues for the third quarter of 2023 rose by 29% year over year (YoY) to $467 million. This growth in net revenues can be chalked up to other sources, such as net interest revenues, which jumped by 96% year over year to $251 million thanks to the expansion of interest-earning assets and higher short-term interest rates.

“However, transaction-based revenues, including revenues from options, equities and cryptocurrencies, decreased by 11% YoY to $185 million,” PYMNTS wrote. “Within this category, cryptocurrencies specifically saw a 55% decrease in revenues, totaling $23 million for the quarter. This decline in crypto trading revenues is a factor contributing to the overall decrease in transaction-based revenues.”

While revenues were up, they still fell short of Wall Street estimates, the Reuters report notes.

News of Alphabet’s sale came on the heels of the report that that company was in discussions to invest hundreds of millions into artificial intelligence (AI) startup Character.AI, which makes character-based chatbots that appeal primarily to younger users.