Robinhood Raises Over $1 Billion In Emergency Funds As Platform Struggles With Reddit-Fuelled Trading Surge

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TOPLINE

Popular trading platform Robinhood has raised over $1 billion in emergency funds in order to cope with the extraordinarily high number of trades this week, a spokesperson told Forbes, as a Reddit-informed army of retail investors pour into heavily shorted stocks like GameStop, Blockbuster, AMC and BlackBerry.  

KEY FACTS

The rapid cash infusion was needed for the company to avoid putting further restrictions on trading in place, two sources told the New York Times.

The brokerage raised $1 billion from existing investors, who the Times report will receive “additional equity in the company”, as well as several hundred million from bank credit lines (Robinhood would not comment on the reports of bank credit).

A Robinhood spokesperson confirmed the New York Times report that it had raised over $1 billion from existing investors, telling Forbes that “this is a strong sign of confidence from investors that will help us continue to further serve our customers.”

It comes as the brokerage firm temporarily suspended purchases for some stocks Thursday in order to meet its “financial requirements, including SEC net capital obligations and clearinghouse deposits,” sparking outrage among users and rare bipartisan condemnation from U.S. lawmakers.

CEO Vlad Tenev defended the suspension, calling it the “correct” thing to do in order “to protect the firm and protect our customers” and denying rumors that it was because the company did not have enough cash on hand (he said it was a preemptive measure).

“Limited” trading of meme stocks — including GameStop, AMC Entertainment, BlackBerry and Bed Bath & Beyond — will resume Friday, Robinhood said.

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