Cathie Wood's Ark Invest has made a significant $13 million investment in Robinhood Markets, purchasing approximately 182,641 shares. This move comes immediately after the U.S. Treasury Department selected Robinhood to serve as the brokerage and initial trustee for the new government-backed "Trump Accounts" savings program for children.
The Treasury's initiative will provide a $1,000 government contribution to eligible U.S. citizens born between January 1, 2025, and December 31, 2028. BNY Mellon was designated as the financial agent to manage the initial accounts and help develop the app, while the Treasury retains control over app operations. Robinhood has also pledged to match the $1,000 government contribution for eligible children of its own employees.
Ark Invest's purchase was executed across several of its flagship ETFs on April 7. The ARK Innovation ETF (ARKK) led with 132,116 shares, followed by the ARK Next Generation Internet ETF (ARKW) with 33,607 shares, and the ARK Fintech Innovation ETF (ARKF) with 16,918 shares. At Robinhood's closing price of roughly $69.65, the total investment amounts to approximately $12.7 million. This marks Ark's first purchase of Robinhood stock in nearly a month.
The news had an immediate market impact. While Robinhood's stock closed marginally down at $69.65, it surged over 7.5% in after-hours trading to $74.92. Despite this bump, Robinhood shares remain down 38% year-to-date, amid a broader downturn in stocks and crypto.
This investment is seen as a strong vote of confidence in Robinhood's future, particularly as the platform expands its services in crypto trading and seeks global growth. The company recently received board approval for a $1.5 billion share buyback program over the next three years. However, Robinhood faces challenges, including a 38% year-over-year drop in Q4 2024 crypto revenue to $221 million and missed overall revenue expectations.
