As per the Wall Street Journal, Robinhood, a retail stock trading company, has purportedly raised $2.4 billion from investors. The latest funding occurred only a few days following the platform raised over $1 billion as emergency cash. The San Francisco-based trading platform proposed six banks to start a credit line within $500 million and $600 million. It raised the additional capital from prevailing investors. It involves Sequoia Capital and Ribbit Capital.
Moreover, Robinhood received the new funding adjacent to $1 billion that the company raised on Thursday. The reserves will enable the firm to meet increasing collateral conditions, which have emerged from a trading surge. Additionally, last week, retail investors employed Robinhood’s investment app to fund Gamestop (GME), driving up the stock price. This led Robinhood to halt trading, while its clearinghouse demanded additional money to process losses on trading.
Robinhood’s capital demand increases post Subreddit WallStreetBets
Nevertheless, Robinhood is already a well-financed startup that disrupted the trading industry with its zero-fee model and analyzing trade execution. The platform often pulled amateur traders, who established a strong community on various social media platforms. The abrupt requirement for capital emerged as traders are continuously seeking positions with some of the stocks, the cost of which skyrocketed lately with a pump by mature traders coordinating on the subreddit WallStreetBets.
However, Robinhood requires to deposit more collateral with the central clearing hub, the Depository Trust and Clearing Corporation with the extended trading activity. This unexpected pump surprised the hedge funds, who held short positions upon stocks such as GameStock. Additional activity across GameStop and other assets compelled the platform to halt crypto trading on Friday.
Robinhood disabled instant deposits and blocked the trading of specific cryptocurrencies, including Dogecoin. A mass marketing of Dogecoin probably formed that choice, apparently coordinated the same group after the mass Gamestop purchase. Likely, the newly-raised funds will enable Robinhood to reclaim its trading services to their usual functionality. Besides that, the Robinhood app was downloaded over 600,000 times on Friday alone, as per JMP Securities.
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