Robinhood raised another $2.4 billion of capital on Monday, days after getting $1 billion from investors.- The now-$3.4 billion capital raise comes as the trading app aims to meet demand from retail traders buying and selling highly volatile stocks.
- It's the company's largest fund raise since it was founded in 2013, signaling confidence from investors, Robinhood said.
- "With this funding, we'll build and enhance our products that give more people access to the financial system," Robinhood said in a statement.
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Trading app Robinhood on Monday raised another $2.4 billion in new funding from shareholders. The activity comes just days after investors initially put $1 billion into the company in order to meet regulatory requirements on the back of the recent trading mania. The Wall Street Journal first reported the funding.
The combined $3.4 billion is the biggest fund raise since the app was founded in 2013.
"This funding is a strong sign of confidence from investors and will help us build for the future and continue to serve people through the exponential growth we've seen this year," the company said in a statement. "With this funding, we'll build and enhance our products that give more people access to the financial system."
The fresh infusion will allow Robinhood to meet the demands of the National Securities Clearing Corporation (NSCC), which requested the trading app to come up with a $3 billion deposit in order to cover trading risks. The clearing agency, however, has since cut down the figure to $700 million.
Robinhood CEO Vlad Tenev told Elon Musk in a livestream on Clubhouse Sunday evening that the clearinghouse's request was "about an order of magnitude more than what it typically is." Tenev added that his company only had $2 billion in venture capital raised at that point.
Retail traders have flocked to trading apps such as Robinhood with plans of buying and selling popular stocks in the past weeks from GameStop to AMC Entertainment. This prompted NSCC to require more liquidity from the company to cover up for possible losses.
While no legal action has been done, the U.S. Securities and Exchange Commission on January 29 said in a statement it is "closely monitoring and evaluating the extreme price volatility of certain stocks' trading prices over the past several days."