Robinhood has been inundated by trading demand for a handful of popular stocks over the past week.
Photo:
Tiffany Hagler-Geard / Bloomberg News
Robinhood Markets Inc. it raised another $ 2.4 billion from shareholders, days after investors agreed to allocate $ 1 billion to the online brokerage to help it spark a commercial frenzy in popular stocks, including GameStop. Inc.
The large infusion – the $ 3.4 billion raised since last Thursday is higher than the company has raised in total so far – gives Robinhood a war chest to cover an increase in warranty requirements arising from the commercial boom. It should also allow the company to support the hundreds of thousands of new accounts users have opened since Thursday and remove many of the trade restrictions that infuriated popular brokerage customers, people said.
The fundraising agreement was structured as a note conveying the option to buy additional shares at a later discount, according to people.
Traders have flooded Robinhood with buy and sell orders from a handful of popular stocks over the past week. Sudden changes in the value of these shares caused the clearing house to process and resolve transactions to demand more cash to cover potential transaction losses.
In an interview posted online Sunday afternoon, Robinhood chief executive Vlad Tenev said the clearinghouse was initially asking for $ 3 billion to back up businesses, “on an order of magnitude more than it usually is “. He spoke Sunday night in an interview with Tesla Inc.
head Elon Musk on a live broadcast from Clubhouse, a social networking app just for popular invitations to Silicon Valley.
Robinhood restricted trading of more than a dozen securities and related options on Thursday, reducing the amount of collateral it needed to post to $ 700 million. Since then it has eased many of the restrictions, but some trade limits remain.
The Robinhood app was downloaded more than 600,000 times on Friday alone, according to JMP Securities analysts. During the market turmoil in March, the Robinhood app was only downloaded about 140,000 times during the busiest day of this month.
More to come …
Write to Peter Rudegeair to [email protected]
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