Why a crypto exchange might want to buy Robinhood – Marketingwithanoy

Sell ​​your business — or not sell your business — is a complicated decision. Price, timing, pride and many other factors play a role in the decision. Hell, maybe you just enjoy running the business, be it a startup, unicorn, or behemoth in the public market.

Sometimes the decision is made in front of a company’s leadership team. Zendesk’s work to prevent it from selling itself only to agree to a lower price later is one such example. Twitter, which is in the midst of a messy sale to Elon Musk, is another.

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All of the above has been on our minds as Sam Bankman-Fried, the CEO of crypto exchange FTX, circled Robinhood. After securing a substantial stake in the company, he denied active talks to buy the US zero-cost broker. Robinhood itself emphasized the fact that the founders have voting rights over the company, meaning the choice of whether or not to sell is theirs. We’ll see.

But why would a crypto exchange even be interested in buying Robinhood? After bouncing the issue in my head since news broke somewhat yesterday that Robinhood may be in the game, I’ve come up with an explanation. Let’s talk about it.

The user question

While the era of rapid user growth at Robinhood is now over, it retains a material user base. As the first quarter results showed, U.S. consumer fintech closed the first quarter with 22.8 million “net cumulatively funded accounts,” up 100,000 from the fourth quarter of 2021 and 4.8 million year-over-year.

Is that a lot of people? Yes, of course.

While it’s difficult to make direct comparisons with other consumer financial technology companies, we can do a little bit of guiding. Coinbase, for example, had 9.2 million “monthly transactions,” or MTUs, in the first quarter. Now we cannot directly compare net funded accounts with monthly active traders. However, it’s fair to note that we expect MTUs to come in at a fraction of net funded accounts. Since Robinhood has net funded accounts that are multiples of the Coinbase MTU figure, it is clear that Robinhood is big, at least in terms of active US crypto accounts.

That’s a busy way of saying that Robinhood’s funded account number would be a huge help to any crypto company looking to grab some market share in the US.

Yes but

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