Robinhood was inundated with the demand to trade a handful of popular stocks last week.
Photograph:
Tiffany Hagler-Geard / Bloomberg News
Robinhood Markets Inc. raised another $ 2.4 billion from shareholders, days after investors agreed to inject $ 1 billion into the online brokerage to help it tackle the commercial frenzy of popular stocks, including GameStop Inc.
The huge infusion – the $ 3.4 billion raised since last Thursday is more than the company has raised in total up to that point – gives Robinhood a war chest to cover an increase in collateral requirements stemming from the commercial boom , people said. It should also allow the company to support the hundreds of thousands of new accounts that users have opened since Thursday and remove many of the trade restrictions that have angered customers at the popular brokerage, people said.
The fundraising agreement was structured as a note that conveys the option to buy additional shares at a discount later, people said.
Traders flooded Robinhood with orders to buy and sell a handful of popular stocks last week. The sharp fluctuations in the value of these shares have led the clearinghouse that processes and closes the trades to ask for more money to cover potential losses on transactions.
In an interview posted online on Sunday, Robinhood Chief Executive Vlad Tenev said the clearinghouse initially asked for $ 3 billion to back up the negotiations – “about an order of magnitude more than usual”. He spoke on Sunday night in an interview with Tesla Inc.
chef Elon Musk in a live broadcast of Clubhouse, a social networking app for guests popular in Silicon Valley.
Robinhood restricted trading on more than a dozen shares and related options on Thursday, which reduced the amount of collateral needed to $ 700 million. Since then, it has loosened many of the restrictions, but some trade limits remain.
Robinhood’s app was downloaded more than 600,000 times just on Friday, according to analysts at JMP Securities. During the height of market turmoil in March, Robinhood’s app was downloaded only about 140,000 times during the most active day of that month.
More to come …
Write to Peter Rudegeair at [email protected]
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