By Niket Nishant
(Reuters) -Google-parent Alphabet (NASDAQ:GOOGL) said on Friday it had slashed its stake in Robinhood (NASDAQ:HOOD) Markets by nearly 90%, cutting its exposure to the trading app operator that has been grappling with a slowdown in its mainstay business.
Alphabet had reportedly invested in Robinhood when the latter was an unlisted startup, and it held over 4.9 million shares in the company as of the end of 2021.
That stake was worth nearly $419 million when Robinhood shares hit their peak of $85 in August 2021, just a month after the initial public offering.
Following the sale, Alphabet now owns 612,214 shares in the company, worth about $7 million, according to Reuters calculations.
As of Thursday, Robinhood shares have dropped 86% from their record levels.
Robinhood has been struggling to regain its footing after emerging as the breakout financial technology app during the pandemic, when several retail traders were drawn to its platform because of its commission-free trades and easy-to-use interface.
The company's platform also played a major role in fostering a meme stock frenzy in January 2021, when several traders banded together on social media to push up the value of highly shorted stocks like GameStop (NYSE:GME).
But the Federal Reserve's tightening cycle last year hammered shares, especially those of high-flying technology companies in which there was a lot of retail interest, denting Robinhood's business.
Earlier this week, Robinhood said it had turned a profit for the first time as a public company, surprising Wall Street, which was expecting a small loss.
However, as retail traders stayed cautious, monthly active users on the platform decreased to 10.8 million, 1 million fewer compared to the first quarter and 3.2 million lesser than last year.
To counter weakness in trading, Robinhood has been looking to expand revenue streams. In June, it agreed to buy financial technology and credit card firm X1.