Shares of Robinhood Markets Inc. charged higher Friday after the trading-app operator disclosed that it has bought back the 55.3 million shares that had been seized by the U.S. government.
The company disclosed in an 8-K filing with the Securities and Exchange Commission that it paid about $605.7 million for the shares, which were being held by the U.S. Marshal Service. That represented 6.1% of the company’s market capitalization of $9.93 billion at Thursday’s close when the purchase closed.
were paid for using corporate cash available on Robinhood’s balance sheet.
The stock rallied Friday and was up 3.4% in midday trading. It has run up 11.8% since closing at a seven-week low of $10.07 on Aug. 17.
The shares were originally acquired through Emergent Fidelity Technologies Ltd. by Sam Bankman-Fried, who founded the failed cryptocurrency exchange FTX, which collapsed last year.
The U.S. Department of Justice had moved to seize Bankman-Fried’s stake in Robinhood, which was reported to total about 56 million shares, in early January. Bankman-Fried was jailed in early August.
In February, Robinhood said it would pursue the purchase of most or all of the 55 million shares that Emergent Fidelity Technologies had bought in May 2022.
The $605,694,411.59 Robinhood paid for the 55,273,469 shares it purchased from the government implies a price of about $10.96 a share.
Based on the Jan. 4, 2023, closing price of $8.26, when reports surfaced that the Justice Department was moving to seize Emergent Fidelity’s stake, the 55.3 million shares Robinhood purchased were valued at about $456.6 million.
Robinhood’s stock has soared 38.4% to date in 2023, while the S&P 500 index
has gained 17.3%.