Robinhood, the online investment platform, raised $3.4 billion in a fundraising round last week. It's the platform's biggest raise, which comes after the online brokerage was pushed to the limit by a retail trading fever in heavily shorted shares of companies such as GameStop.
Popular with young investors due to its easy-to-use interface, Robinhood is currently at the heart of a Wall Street frenzy that started last week after a Reddit thread called WallStreetBets. The Reddit thread called on its followers to trade certain stocks that were being heavily shorted by wealthy hedge funds.
Investors pumped in $2.4 billion in funding
The Menlo Park, a Californian-based company said in a blog post that Robinhood’s existing investors raised $2.4 billion in funding. The additional funding comes just days after it raised $1 billion through a mix of debt and equity.
“The latest round was led by Ribbit Capital, with participation from existing investors, including ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures, and New Enterprise Associates”. It was revealed that the $1 billion in funding came from Sequoia and Ribbit.
Robinhood in a statement said it had access to a credit line, and that the funds raised would be used to invest in its unprecedented user growth.
Its Chief Financial Officer Jason Warnick said the amount raised will also be used to grow the platform so that it can provide the needs of its new and old customers.
Robinhood was forced to delist some stocks from its platform
The company was pushed to stop the purchase of a handful of stocks including GameStop and AMC Entertainment last week. The company's actions drew censure from customers, celebrities, and politicians.
This led the company on Monday to elaborate on the mechanics of how it works in terms of trading, clearing, and settlement, in an attempt to answer questions related to the trading craze that made Wall Street panic.
The recent development also raised questions on whether the company will move forward with its plans of an initial public offering.