Robinhood raised $3.4 billion in capital in the past week, its biggest ever, after the online brokerage was strained by a retail trading frenzy in heavily shorted shares of companies such as GameStop Corp.FILE PHOTO: Trading information for GameStop is displayed on the Robinhood App as another screen displays the Robinhood logo in this photo illustration January 29, 2021. REUTERS/Brendan McDermid/Illustration/File Photo
The brokerage, which has become popular with young investors for its easy-to-use interface, is at the heart of a mania that kicked off last week following calls by Reddit thread WallStreetBets to trade certain stocks that were being heavily shorted by hedge funds.
Robinhood’s existing investors pumped in $2.4 billion in funding, the Menlo Park, California-based company said in a blogpost on Monday, just days after it raised $1 billion through a mix of debt and equity.
The latest round bit.ly/3oHtJx0 was led by Ribbit Capital, with participation from existing investors, including ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates.
New York Times reported that the $1 billion in funding came from Sequoia and Ribbit.
Robinhood also said it had tapped a credit line and that the funds raised would be used to invest in “record customer growth”.
“This round of funding will help us scale to meet the incredible growth we’ve seen and demand for our platform,” Chief Financial Officer Jason Warnick said.
Robinhood last week was forced to curb the purchase of a handful of hot stocks including GameStop and AMC Entertainment as it grappled with the extraordinary market activity, drawing the ire of customers, celebrities and politicians.
The company on Monday elaborated on the mechanics of how it works in terms of trading, clearing and settlement, seeking to answer questions related to the trading event that has sent shock waves through Wall Street.
Robinhood is preparing for an initial public offering and recent developments raise questions on whether it will push forward with those plans