Robinhood raises another $2.4 billion as broker app deals with retail trading frenzy
- Online brokerage Robinhood said it raised another $2.4 billion from investors.
- That brought to $3.4 billion the firm has raised amid the recent market volatility.
Discount online brokerage Robinhood said Monday it has raised another $2.4 billion from investors amid the extreme bouts of market volatility.
The $3.4 billion it has mobilized since Thursday exceeds the total amount it has raised since its founding 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.
"We're witnessing a movement of everyday people taking control of their own financial futures, many investing for the first time through Robinhood."
It said it will use the new funding to expand its programs on financial literacy.
"With this funding, we'll build and enhance our products that give more people access to the financial system," the company's statement said.
Robinhood has been in the center of the storm around a move by retail investors over the past week that has squeezed hedge funds that bet big against stocks including GameStop and AMC Entertainment.
As shares in the companies surged, Robinhood placed extreme limits on how much their customers, mainly younger and small-dollar investors, could buy. The company narrowed that list Monday from about 50 to eight.
Investors who had met up online, in particular on Reddit's WallStreetBets forum, snapped up shares of the companies, forcing some institutional firms into losses. The moves set off a vicious round of volatility on Wall Street that saw the Dow industrials lose close to 3%.
Robinhood and other brokers are required to meet certain deposit requirements from trade clearinghouses. Because of the heavy trading volume, Robinhood said last week it had to impose the restrictions because deposit requirements set by its clearinghouse were much greater that expected.
"We had no choice in this case," Robinhood co-founder Vlad Tenev said in an Clubhouse discussion with Elon Musk late Sunday Pacific time. "We had to conform to our regulatory capital requirements."