After a hectic week for the stock market and halting trading of some speculative securities including GameStop (GME) and AMC, the mainstream investment app Robinhood has raised new capital. The new funds total more than $ 1 billion, with the company telling TechCrunch that they were raised from its existing investor base.
The New York Times reports that the company raised new capital after tapping its lines of credit for $ 500-600 million; the company did not respond to a question from TechCrunch regarding its lines of credit.
The reported drawdown matches yesterday’s reports that Robinhood had accessed nine digits of capital to ensure it had sufficient funds to meet regulatory minimums and other requirements related to its users’ trading activity.
Retail investors, as well as institutional capital, have attacked short positions in certain stocks in recent weeks, leading to a standoff between bullish investors and bearish bets; the ensuing uproar led to an increase in the volume of volatile stocks, which led Robinhood to need more capital to keep its gears going.
In an article discussing his decision yesterday to restrict trading in certain securities, Robinhood wrote that he had “many financial requirements, including SEC net capital obligations and clearing house deposits,” adding that “some of these requirements fluctuate with market volatility and can be substantial in the current environment. “
The mainstream fintech firm Unicorn has halted trading in stocks like GameStop, which yesterday became the focus of the trade storm, leading to frantic accusations of angry users that something nefarious was brewing. Later that day, the clearinghouse entity that powered exchanges for other consumer trading services also discontinued the service for a similar set of shares.
Robinhood told users that he would somehow allow trading to start today on stocks he had previously restricted.
It doesn’t look like the current commercial rejections will abate anytime soon. Shares of GameStop, the most famous so-called ‘stock meme’ in the current trade war, rose just under 94% this morning in pre-market trading, implying that many investors are ready. to continue to push its value higher in the hope of breaking short bets posed by other investors.
One of the results of the current climate is a boom in demand for trading applications. Today, on the US iOS App Store, Robinhood is ranked first; Webull, a rival service, is second; Reddit, a hub for exchanging gossip primarily via r / WallStreetBets is third; Coinbase, a popular crypto trading service, ranks fourth. Square’s Cash app, which purchases stocks, is ranked seventh, Fidelity’s iOS app is ranked tenth and TD Ameritrade is ranked 16th. Finally, E * Trade’s own application is ranked 18th. It’s a good performance for fintech, both in the start-up and in place.
No one knows what will come next, how the transactions play out, and whether the current boom in retail activity involving equity trading will persist. What seems clear, however, is that today is going to be very ridiculous.