Robinhood has been inundated with demand to trade a handful of popular stocks in the past week.
Photo:
Tiffany Hagler-Geard / Bloomberg News
Robinhood Markets Inc. raised another $ 2.4 billion from shareholders a few days after investors agreed to invest $ 1 billion in online brokerage to help lift a trade frenzy in popular stocks, including GameStop Inc.
The huge infusion – the $ 3.4 billion raised last Thursday is higher than the company’s total so far – gives Robinhood a war cap to cover an increase in collateral requirements arising from the trading boom. , people said. It should also allow the company to support hundreds of thousands of new accounts opened on Thursday by users and remove many of the trading restrictions that have annoyed popular brokerage clients, people said.
The fundraising agreement was structured as a note conveying the option to buy additional shares at a later discount, people said.
Traders flooded Robinhood with orders to buy and sell a handful of popular shares in the past week. Gross changes in the value of the shares have led to the clearing house processing and settling transactions to demand more money to cover potential transaction losses.
In an interview posted online late Sunday, Robinhood chief executive Vlad Tenev said the clearinghouse had initially asked for $ 3 billion to support transactions – “about an order of magnitude more than usual”. He spoke Sunday night in an interview with Tesla Inc.
head Elon Musk on a live stream of Clubhouse, a guest-only social networking app popular in Silicon Valley.
Robinhood restricted trading in more than a dozen shares and related options on Thursday, reducing the amount of collateral it needed to register to $ 700 million. It has since eased many of the restrictions, but some trading limits remain.
The Robinhood app was downloaded more than 600,000 times on Friday alone, according to JMP Securities analysts. During the period of market turmoil in March, the Robinhood app was downloaded only about 140,000 times on the busiest day of the month.
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