Robinhood raised an additional $ 2.4 billion over the weekend, the trading app said on Monday, adding $ 1 billion from its investors earlier last week.
Robinhood’s chief financial officer, Jason Warnick, said in a post on the company’s website, “This round of funding will help us meet our growth and demand for our platform.”
The infusion was led by Rebate Capital and included other existing investors such as Sequoia Capital, Robinhood. The company called it a “strong sign of confidence”.
The online trading firm has been at the center of a trading frenzy over video-game retailer Gametop and other stocks, which have grown significantly in the past week.
Increased interest among amateur investors – many of whom congregate on the Wall Street Bates Forum on Reddit – Gametop’s shares rose 1,600 percent in January.
A sudden wave of purchase of shares and options contracts has squeezed hedge funds, which placed bets for shares to fall. But it has also caused complications for Robinhood. As its users adopted highly volatile stocks, the trading platform was forced to substantially increase the amount of money it would accumulate with clearinghouses processing its trades.
On Thursday, a share of Depository Trust and Clearing Corporation sought $ 3 billion in additional collateral from Robinhood, Wall Street’s chief clearinghouse for stock trades, to cover risky trades by its customers, chief executive of the trading app According to Officer Vlad Talev. Mr Tenev said in an interaction with Elon Musk, the CEO of Tesla on the social network clubhouse, “usually” an order of magnitude more was needed. That demand was later reduced to about $ 700 million.
Nevertheless, Robinhood said that on Thursday night it had raised $ 1 billion from existing investors. The firm also tapped a credit line of at least $ 500 million.
“It was nerve-racking,” Mr. Tenev said.