Robinhood raised more than $ 1 billion on Thursday to help meet the rising demand from amateur investors using the stock trading app amid this week’s GameStop frenzy, a report said.
The brokerage app, which caters to many of the investors who raised Gamestop and AMC prices, needed cash injection, in part to pay users for their transactions, The New York Times reported.
Robinhood co-founder Vladimir Tenev said the market’s volatility had caused disruption and that the company had decided to freeze certain trades.
“We had to make a very difficult decision to protect our customers and our company,” Tevev told Chris Cuomo of CNN on Thursday night.
“We are in a historic situation where there is a lot of activity and a lot of shopping concentrated on a relatively small number of symbols that go viral on social media,” he said.
“So we haven’t seen anything like it before, and in order to prudently manage risk and deposit requirements, we had to restrict the purchase of these 13 shares.”
Tenev did not mention that the company was looking for a $ 1 billion cash injection to weather the storm.
The company, which is privately held but is expected to go public this year, acquired $ 500 million to $ 600 million in credit from six banks, sources told The Times.
The remaining capital was provided by existing investors, the report said.
“This is a strong sign of investor confidence that will help us continue to serve our customers,” Josh Drobnyk, a spokesman for Robinhood, told the Times in a statement.
On Thursday, Robinhood froze the stock purchases of GameStop and other companies driven by Reddit users who stirred the market, a move that sparked widespread outrage and several lawsuits.
At the end of the day, the company announced that it would “allow limited purchases” of these shares on Friday.