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HOOD Stock Alert: Robinhood Makes Big Crypto Bet With Bitstamp Buy

The deal could further undermine Robinhood’s position with US regulators

HOOD Stocks – HOOD Stock Alert: Robinhood Makes Big Crypto Bet With Bitstamp Buy

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Robin Hood (NASDAQ:CAP) shares rise for the second day in a row after the company announced it will pay $200 million in cash to acquire cryptocurrency exchange Bit stamp. Experts consider the transaction to be a big bet by Robinhood on the crypto sector.

Founded in 2013, Robinhood offers a trading app that has attracted many retail investors. However, lately the company has been trying to offer more types of financial services. Meanwhile, Bitstamp already offers a number of additional services related to cryptos, including staking and lending. According to CNBCBitstamp’s flagship spot exchange is most popular in Europe and Asia, and Robinhood believes the deal will allow the company to accelerate the pace of its moves into new global markets.

The transaction is expected to close in the first half of 2025 and will lead Robinhood to compete more intensively with major crypto exchanges.

Robinhood CEO Vlad Tenev believes crypto will “fundamentally reorganize the financial system.”

What investors should pay attention to

Last month, Robinhood received a notice from Wells regarding its crypto activities from the U.S. Securities and Exchange Commission (SEC). A well message indicates that regulators intend to accuse a particular company of violating some laws or regulations. With that in mind, investors should consider the possibility that the Bitstamp acquisition will make regulators even less satisfied with Robinhood. That’s because the deal sees the company become even more involved in the crypto sector.

Importantly, investors should also keep in mind that the valuation of HOOD stock is now quite high. Specifically, shares now have a large price-to-sales (P/S) ratio of 9.4 times.

As of the date of publication, Larry Ramer had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has been researching and writing articles about American stocks for fifteen years. He has worked at The Fly and Israel’s largest business newspaper, Globes. Larry started writing columns for InvestorPlace in 2015. His highly successful, contrarian choices included SMCI, INTC and MGM. You can reach him on Stocktwits at @larryramer.