![]() ![]() To protect investors, regulators require brokerages to keep a certain amount of capital on hand. That’s because whenever investors buy stocks, brokerages like Robinhood must make a deposit first at a clearing house. Robinhood originally cited “recent market volatility” for its decision to restrict trading in GameStop, AMC, Nokiaįacing a backlash from investors and lawmakers, Robinhood later explained that the market turbulence created financial pressures. The startup, which had been eyeing a potential 2021 IPO, was valued at $11.2 billion in August. It’s not clear how much Robinhood was valued at in the last-minute round of funding. ![]() (AMC) and other stocks have been skyrocketed in recent days, bid up by an army of traders on a Reddit message board called WallStreetBets. Robinhood told CNBC on Thursday that tapping its credit line was a “proactive measure.” It either faced a liquidity crisis - or narrowly avoided one. “This is a strong sign of confidence from investors that will help us continue to serve our customers,” Robinhood said in a statement.īut the fact that Robinhood felt the need to raise so much money, just months after raising hundreds of millions of dollars, signals the financial pressure facing the company. The startup faced a bipartisan backlash Thursday for its decision to limit trading - a move that ran counter to its stated mission of democratizing investing. Inside Robinhood, the free trading app at the heart of the GameStop mania (Photo by Noam Galai/Getty Images for TechCrunch) Noam Galai/Getty Images Co-founder and co-CEO of Robinhood Vladimir Tenev speaks onstage during TechCrunch Disrupt NY 2016 at Brooklyn Cruise Terminal on in New York City. ![]()
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