Robinhood Markets (NASDAQ:HOOD) gained in trading after announcing the acquisition of Bitstamp for $200 million in cash. Bitstamp is a global crypto exchange that was founded in 2011. The acquisition is expected to close in the first half of next year.
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HOOD’s Acquisition Rationale
The acquisition of Bitstamp is a major step for Robinhood in expanding its presence in international markets. This deal will bring Bitstamp’s customers from the EU, UK, U.S., and Asia, as the company holds more than 50 active licenses and registrations globally.
Robinhood’s crypto business is expanding rapidly in the U.S. but is also facing increased regulatory scrutiny. While the company delivered solid results in the first quarter, it also disclosed that it had received a Wells notice from the Securities and Exchange Commission (SEC) over tokens traded on its platform.
A Wells notice from the SEC indicates that the regulatory body has concluded an investigation and intends to bring an enforcement action against the company.
Is HOOD a Good Stock to Buy?
Analysts remain sidelined about HOOD stock, with a Hold consensus rating based on five Buys, eight Holds, and three Sells. Over the past year, HOOD has increased by more than 100%, and the average HOOD price target of $20.86 implies a downside potential of 3.3% from current levels.
