Robinhood, the trading platform that became a battleground in the war between amateur traders and Wall Street pros, has another $2.4 billion from shareholders, according to The Wall Street Journal report.
The latest funding came only a couple of days after the platform raised over $1 billion as emergency cash. Then, the San Francisco-based trading platform approached six banks to open a credit line between $500 million and $600 million and raised the additional cash from existing investors, including Sequoia Capital and Ribbit Capital.
Robinhood is already a well-funded startup that disrupted the trading industry with its zero-fee model and simplifying trade execution. The platform mostly attracted novice traders, who formed a strong community on many social media platforms.
The latest $3.4 billion in funding has dwarfed the trading startup’s entire earlier funding sum. According to Crunchbase, Robinhood raised $2.2 billion earlier in several funding rounds earlier.
The Cash Has Secured Robinhood’s Position
The sudden need for capital arose as traders are continuously taking positions with a handful of stocks, the price of which skyrocketed recently with a pump by mature traders coordinated on the subreddit WallStreetBets.
With the increased trading activity, Robinhood needs to put up more collateral with the central clearing hub, the Depository Trust & Clearing Corporation.
This sudden pump stunned the hedge funds, who took short positions against stocks like GameStock. FortuneZ earlier today reported that Melvin Capital took a loss of 53 percent due to the pump by the rookie investors.
Robinhood, which brewed this rookie trader group, is now seeing an influx of hundreds of thousands of new accounts, who are jumping in to make some money from the crazy market. The Robinhood app was downloaded over 600,000 times on Friday alone, as per JMP Securities. The latest funding would be enough for the startup to secure its position in the market, whatever way it goes now.