Robinhood Raises $1 Billion From Investors To Help With Emergency Covers

By Amit Chowdhry ● Jan 29, 2021
  • Online trading platform Robinhood has raised $1 billion in additional capital. These are the details. 

Online trading platform Robinhood has raised $1 billion in additional capital as many of its users have been participating in volatile trading involving GameStop, AMC, Nokia, BlackBerry and several other companies. These volatile trades are part of an ongoing battle between short-selling hedge funds and retail investors interacting on Reddit group r/WallStreetBets and Discord chat rooms.

The $1 billion was raised in order to fulfill orders of the significant trading of the aforementioned stocks. Robinhood had borrowed somewhere around $600 million in the form of a line of credit from six banks. And Robinhood also worked with its investors like Sequoia Capital and Ribbit Capital to put together another $1 billion investment for the platform for additional equity at a discounted valuation.

“This is a strong sign of confidence from investors that will help us continue to further serve our customers,” said Robinhood spokesperson Josh Drobnyk in a statement The New York Times.

By raising this capital, Robinhood could ensure that it does not have to place further limits on customer trades, said the sources with the New York Times.

At the same time, Robinhood has also been facing a backlash for temporarily blocking the trading of the stocks yesterday and forcing the sales of certain positions.