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Bahamian crypto exchange FTX has held preliminary talks with Webull, Apex Clearing, and Public.com over a possible acquisition for stock trading.
FTX is reportedly in talks with at least three brokerage firms over a possible acquisition following the crypto exchange’s recent foray into stock trading. According to unnamed sources familiar with the matter, the Bahamian crypto exchange has already approached Webull, Apex Clearing, and Public.com. The same sources state that FTX’s acquisition discussions with the three privately-held brokerage startups are still in the early stages.
The trio of brokerage companies is registered with the Financial Industry Regulatory Authority (FINRA). This grants them the license to transact securities for themselves and also on behalf of their clients. Furthermore, Public.com and Webull also happen to be registered investment advisers.
FTX’s latest business move comes as a response to retail investor appetite. These investors are currently looking to simultaneously hold portfolios in both crypto and stocks. This growing trend has seen an increasing number of brokerage firms offering both asset classes to their investor base. Some examples include fintechs such as SoFi and Block, while financial services platform Robinhood (NASDAQ: HOOD) has also incorporated crypto into its core stock-trading base.
When FTX US announced last week that it intends to offer exposure to traditional equities, its president Brett Harrison said:
“The US has the largest retail base in the world and you don’t want to have to split into two different apps to trade two different asset classes. This is not a revenue-generating model for us, it’s more of a user acquisition strategy.”
Plausible FTX Stock Firm Acquisition Follows Bankman-Fried’s Robinhood Buy-in
The FTX acquisition agenda also follows founder Sam Bankman-Fried’s recent 7.6% stake purchase in Robinhood. In an SEC filing released less than two weeks ago, Bankman-Fried revealed that he increased his stake at the end of April. As a result of this development, FTX shares spiked 36% initially before retracing slightly. Robinhood closed at $9.81 on the day of Bankman-Fried’s acquisition, giving him a sizable stake of approximately $554 million.
As of Monday, Robinhood shares were trading hands at $9.94, around 85% lower than the IPO-induced all-time high last summer. The company’s stock had plunged even deeper to $8.15 two weeks ago during the heat of the global market collapse.
Fintech Stock Outlook
The ongoing market contraction owing to weakening fintech stocks and tighter private valuations have spurred a few analyst opinions. For instance, JMP Securities director of financial technology research Devin Ryan has made predictions about demand and market behavior. Ryan said:
“Many in the industry are flush with cash and strategic acquisitions can accelerate growth, so we expect demand will remain strong.”
“We expect buyers will be looking for targets that add a product capability and expertise, broaden the customer footprint as customer acquisition costs have risen, or even simply add talent in a competitive hiring landscape,” added Ryan.