Robinhood Raises $1 Billion After Reddit Trading Surge

Trading platform Robinhood raised more than $1 billion in emergency money in order to handle the extremely high number of trades this week, as huge retail investors familiar with Reddit is pouring into hot selling stocks like GameStop and Blockbuster, AMC and BlackBerry.

Two sources told the New York Times that a rapid cash infusion was essential for the company to avoid placing further restrictions on trading.

GameStop shares more than doubled, to $347.51, and are up more than 400%t this week. AMC, besieged by the coronavirus pandemic and stay-at-home measures, quadrupled to $19.90 a share.

The trading firm has raised a billion dollars from existing investors, who will receive "additional shares in the company", in addition to hundreds of millions of bank lines of credit.

A spokesperson for Robinhood confirmed that it has raised more than $1 billion from existing investors, telling Forbes that "This is a strong sign of investor confidence that will help us continue to serve our customers more."

This comes as the brokerage firm temporarily halted its purchases of some shares on Thursday in order to meet its "financial requirements, including net capital commitments in the Securities, Exchange Commission and clearinghouse deposits", sparking outrage among users and a rare bipartisan condemnation on the part of American legislators.