Robinhood has been inundated with demand for a handful of popular stocks over the past week.
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 online brokerage to help wipe out a trading frenzy in popular stocks, including GameStop. Inc.
The people said the huge infusion – the $ 3.4 billion raised since last Thursday – is more than the company has raised in total so far. It will also enable the company to support the hundreds of thousands of new accounts that users have opened since Thursday and to remove many of the trading restrictions that angered customers of the popular brokers.
The people said the fundraising deal was structured as a note offering the option to buy additional shares at a later discount.
Traders flooded Robinhood last week with orders to buy and sell a handful of popular stocks. The sharp swing in the value of the shares prompted the clearing house that processes and settles the trades to ask for more cash to cover potential losses on the transactions.
In an interview posted online late Sunday, Robinhood CEO Vlad Tenev said the clearing house initially asked for $ 3 billion to support the trade – “about a larger order than usual.” He spoke in an interview with Tesla on Sunday night Inc.
boss Elon Musk in a live stream of Clubhouse, a social networking app only popular in Silicon Valley.
Robinhood on Thursday restricted trading in more than a dozen stocks and related options, reducing the amount of collateral it needed to drop to $ 700 million. It has since weakened many of the restrictions, but some trade limits remain.
According to analysts at JMP Securities, Robinhood’s app was downloaded just over 600,000 times on Friday. During the highly turbulent market in March, Robinhood’s app was downloaded only 140,000 times during the most active day of that month.
More to come …
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