TLDR
- Robinhood invested in crypto trading platform Talos in a $45 million Series B extension round, valuing Talos at $1.5 billion
- Talos provides institutional-grade crypto trading infrastructure to hundreds of clients globally, with asset managers representing roughly $21 trillion in AUM
- The funding round included new strategic investors Sony Innovation Fund, IMC, QCP, and Karatage, alongside returning backers a16z crypto, BNY, and Fidelity
- Robinhood stock fell approximately 2% on the announcement as investors expressed concerns about valuation after the stock doubled over the past year
- Talos recently acquired Coin Metrics for over $100 million as part of its expansion strategy through mergers and acquisitions
Robinhood Markets stock dropped about 2% on Thursday despite announcing a strategic investment in Talos, a crypto trading technology platform. The company joined a $45 million Series B extension round that values the New York-based firm at $1.5 billion.
The investment comes as Robinhood expands its cryptocurrency infrastructure and product offerings. Talos originally raised $105 million in May 2022 at a $1.25 billion valuation. The new extension brings total Series B funding to $150 million.
Talos builds institutional-grade infrastructure for digital asset trading. The platform serves hundreds of clients across roughly 35 countries. Asset managers using Talos collectively represent about $21 trillion in assets under management.
“Talos’s flexibility and rapid adaptability allow us to deepen our liquidity and deliver even more advanced features to Robinhood Crypto customers,” said Johann Kerbrat, SVP and GM of Crypto at Robinhood. The partnership should improve the trading experience for Robinhood’s crypto users through better behind-the-scenes connections.
The company has been pushing deeper into blockchain technology. Robinhood is developing its own blockchain network built on Arbitrum. It has also rolled out tokenized stock trading in Europe plus new staking and perpetual futures offerings.
New Strategic Partners Join Funding Round
The extended Series B included participation from Sony Innovation Fund, IMC, QCP, and Karatage as new strategic investors. Returning backers a16z crypto, BNY, and Fidelity Investments also participated in the round.
Anton Katz, CEO and co-founder of Talos, said the firm extended the funding round to accommodate strategic partners who recognize the company’s role in providing core infrastructure. Traditional finance firms have made up 60% to 70% of Talos’s new customers over the past year.
Talos pools liquidity from exchanges, over-the-counter desks, and prime brokers. The platform provides institutions with tools for trade execution, risk management, and post-trade settlement through a single interface or API.
The firm has been actively expanding through acquisitions. Talos recently bought Coin Metrics for over $100 million, its largest deal to date. The acquisition brought onchain analytics, market data, and benchmark indexes to the platform.
Stock Faces Valuation Concerns
Despite the strategic investment, Robinhood shares fell as investors questioned whether the stock price has risen too quickly. The stock doubled in value over the past year and was added to the S&P 500 index.
Analysts at Simply Wall St recently warned the stock might be overvalued by more than 100% based on fundamental metrics. When shares become expensive, even positive news like the Talos deal may not prevent profit-taking.
On TipRanks, Robinhood has a Hold consensus rating based on 15 Buy and four Hold ratings. The average 12-month price target of $154.94 implies 52.4% upside potential from current levels.
Robinhood has reported increased trading volumes and product engagement as it invests in crypto infrastructure. The company has also seen growth in prediction markets. Talos’s 2022 Series B was led by General Atlantic, with participation from BNY, Citi, Wells Fargo Strategic Capital, and DRW Venture Capital.
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