because nobody parties harder than me, I spent part of my week reading Coinbase’s investor call after the earnings report. The US crypto exchange pulls in some questions from non-analysts during its chats, making for a slightly more entertaining series of prompts and answers. You read it all here.
I bring it up because someone asked Coinbase if the company could see a “strategic advantage in acquiring or merging with Robinhood.” You might be shocked to learn that Coinbase wasn’t quite thrilled with the idea.
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And then, yesterday, the CEO of Coinbase rival FTX, Sam Bankman-Fried, announced that he had purchased 56,273,469 shares of Robinhood, representing about 7.6% of the common stock in the company.
Shares of Robinhood have surged in pre-market trading, rising nearly 24% in the wake of the news. Why? Because investors hope FTX will pick up Robinhood for a premium. If FTX bought Robinhood, investors would likely expect an exit price well above the low stock price. Therefore, the short-term potential exit shot higher, turning it into a buy, when the FTX CEO moved into the stock.
According to Bankman-Fried’s filing, he believes the Robinhood stock “represents an attractive investment.”
There is an interesting tension between the Coinbase and FTX news that we have to unpack. It’s Friday and we deserve a little thought. Let’s have some fun!
If stocks go crypto, will crypto become stocks?
A running joke at Marketingwithanoy is that all fintech companies, no matter where they start, look pretty much the same.
A prime example of this is SoFi, best known for its student loan refinancing, which now offers credit cards, mortgages, business products, checking accounts, and more. SoFi even offers crypto investing to some degree, which may seem like a pretty big chunk from the get-go.
That SoFi became broad is not a diss; instead, it reminds us that acquiring users in the fintech market is expensive. That high cost makes it a good thing to try and get every user of your fintech company to use as many products as possible after they’ve been purchased. The logic here is simple: CAC is CAC, so if you want to increase customer influence, go for more LTV. (In venture-speak, CAC means “customer acquisition cost,” while LTV refers to a customer’s lifetime value.)
This is also why we’ve seen Square become Block and spread its wings across the fiat and web3 economies, why you can buy and sell crypto with PayPal, and so on.
And yet, when Coinbase held its earnings call, President and COO Emilie Choi said the following when asked about buying Robinhood (emphasis Marketingwithanoy):