Robinhood Raises Over $1 Billion In Emergency Funds As Platform Struggles With Reddit-Fueled Buying and selling Surge
Popular trading platform Robinhood raised over $ 1 billion in emergency funds to handle the extraordinarily high number of trades this week, a spokesman told Forbes, as a Reddit-informed army of retail investors into sharply shortened stocks like GameStop, Blockbuster , AMC and BlackBerry.
The Robinhood trading platform suspended some trades on Thursday due to the high trading volume of … [+]
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The quick cash inflow was required for the company to avoid further trade restrictions, two sources told the New York Times.
The broker raised $ 1 billion from existing investors who will receive “additional equity in the company,” according to the Times report, as well as several hundred million dollars from bank credit lines (Robinhood would not comment on bank credit reports).
A Robinhood spokesperson confirmed the New York Times report that it raised over $ 1 billion from existing investors and told Forbes that “this is a strong sign of investor confidence that will help us keep our clients going.” continue to operate. ”
The brokerage firm temporarily suspended purchases of some shares on Thursday to meet its “financial requirements, including the SEC’s net capital obligations and clearinghouse deposits.” This sparked outrage among users and a rare bipartisan condemnation from US lawmakers.
CEO Vlad Tenev defended the suspension, calling it the “right thing” to “protect the company and our customers,” and denied rumors that the company did not have enough cash (he said it was a preventive measure).
“Restricted” trading in Meme stocks – including GameStop, AMC Entertainment, BlackBerry, and Bed Bath & Beyond – will resume on Friday, Robinhood said.
Robinhood is at the center of a movement designed to challenge Wall Street’s financial hegemony. Armies of retail investors, many of whom were informed by forums like Reddits r / WallStreetBets, have helped raise the stocks of companies like GameStop, AMC, BlackBerry, and even Blockbuster, causing massive losses to the hedge funds that cut the stocks . The platform’s decision to suspend buying some Meme stocks sparked almost universal outrage. Disgruntled consumers fueled the app’s ratings in online stores with a barrage of one-star ratings and politicians who vowed to investigate the decision.
Online retailers have also stacked themselves into the one-off cryptocurrency Dogecoin, which was inspired by a viral image of a Shiba Inu dog. Reddit forums said “It’s Doge Time” to make it the Crypto GameStop. Its value has increased by over 500% in 24 hours.
“It’s Doge Time”: Dogecoin Rises As Reddit Traders Push To Make It Crypto GameStop (Forbes)
Robinhood CEO: We Made the ‘Right’ Decision to Limit GameStop Trades (Forbes)
Robinhood To Restart ‘Limited’ Trading In Meme Stocks GameStop, AMC As Reddit Rally Unravels (Forbes)
Robinhood’s Trading Freeze unites political enemies from Cruz to Warren – and they’re all furious (Forbes)
Robinhood In Need Of Cash Raises $ 1 Billion From Its Investors (NYT)
Robinhood Raises $ 1 Billion For Cash After Merchant Uprising (Bloomberg)