Robinhood has been inundated over the past week with requests to trade a handful of popular stocks.
Photo:
Tiffany Hagler-Geard / Bloomberg News
Robinhood Markets Inc. raised another $ 2.4 billion from shareholders days after investors agreed to pump $ 1 billion into the online brokerage to help it live out a trading frenzy in popular stocks, including GameStop. Inc.
The massive infusion – the $ 3.4 billion raised since last Thursday is more than the company has raised in total so far – gives Robinhood a war chest to cover an increase in collateral requirements due to the trade boom, said the people. It should also enable the company to support the hundreds of thousands of new accounts users have opened since Thursday and to lift many of the trading restrictions that angered clients of the popular brokerage, the people said.
The fundraising deal was structured as a note showing the option to buy additional shares at a discount later, the people said.
Traders have inundated Robinhood with orders to buy and sell a handful of popular stocks for the past week. Sharp fluctuations in the value of those shares prompted the clearinghouse that processes and settles the transactions to request more cash to cover possible losses on the transactions.
In an interview posted online late Sunday, Robinhood Chief Executive Vlad Tenev said the clearinghouse initially asked for $ 3 billion to support the transactions – “about an order of magnitude more than usual.” He spoke in an interview with Tesla on Sunday evening Inc.
boss Elon Musk on a live stream of Clubhouse, an invitation-only social networking app available in Silicon Valley.
Robinhood restricted trading of more than a dozen stocks and related options on Thursday, cutting the amount of collateral needed to book to $ 700 million. It has since eased many of the restrictions, but some trading limits remain.
According to JMP Securities analysts, Robinhood’s app was downloaded more than 600,000 times on Friday alone. During the height of the market turmoil in March, Robinhood’s app was only downloaded about 140,000 times during its most active day that month.
More to come…
Write to Peter Rudegeair at [email protected]
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