This is a fascinating story. I will continue to update this post with new information including published articles.
Updated Interview on SmartHer News - Friday Feb 5, 2021
" ... Reddit was the shiny stock..."
Here is the interview on YouTube << Click Here
More to the story: "...Old Game by a Different Name...."
"....There may be some big professionals in there in the GameStock trade to turn the crowd into a mob...."
CNBC Art Cashin. Video here.
From Wall Street Journal - Jan 29, 2021
Wall Street Journal - Options, Reddit and GameStop
From SmartHer News - Last Saturday 1/30/2021
Great YouTune Video - SmartHer News
From PitchBook News today -2/2/2021
| Robinhood rakes in $2.4B more to weather trading chaos |
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 | | More than 1 million users are said to have downloaded Robinhood's app on Friday. (Justin Sullivan/Getty Images) |
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Robinhood has added $2.4 billion to its war chest after raising $1 billion last week in a scramble to secure funds to withstand a trading craze in stocks like AMC Entertainment and GameStop. The online brokerage is also considering raising $1 billion in debt from banks to help with the trading volatility, Reuters reported.
The $3.4 billion amassed since last Thursday is more than the roughly $2.2 billion Robinhood had raised through last October, according to PitchBook data. Ribbit Capital led the new round, with participation from Iconiq Capital, Sequoia, Andreessen Horowitz, Index Ventures and NEA.
The stock trading company has been at the center of the ongoing Wall Street drama between retail investors and short-sellers, which has propelled the price of a number of stocks, and more recently, the price of silver.
The enormous capital infusion will likely help Robinhood deal with collateral requirements stemming from the recent trading surge, help support the influx of new accounts and remove trading restrictions that caused widespread outrage from users last week, The Wall Street Journal reported.
More than 1 million users downloaded the Robinhood app on Friday amid the trading frenzy, exceeding the number of downloads in all of December, Forbes reported. Robinhood's decision to restrict trading on certain hot stocks last week swiftly drew lawsuits that alleged market manipulation and breach of contract.
Related read: The seismic saga of GameStop and Robinhood |
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Wall Street Journal:
"Robinhood Markets Inc. raised more than $1 billion from its existing investors, an infusion meant to help the company meet rising demands on its cash stemming from frenzied trading (Links to an external site.) in GameStop (Links to an external site.) Corp. GME 74.58% (Links to an external site.)and other hot stocks.
Robinhood and other brokerages in recent days have experienced a surge in trading volume (Links to an external site.) in a small number of stocks, prompting the clearinghouses that help process and settle trades to ask them for more cash to cover the transactions. To help manage those demands, Robinhood raised fresh equity late Thursday, the company said Friday. It also tapped its credit lines with banks.
Because of a lag between when investors book new positions in a stock and when their cash is actually exchanged for securities, brokerages like Robinhood have to maintain deposit accounts at the clearing firms that help finalize trades. Clearing firms, such as the Depository Trust & Clearing Corp., require brokerages to post more of their own money in riskier times to insure against losses."
From "Pitchbook:"
 | | GameStop was among 13 companies that Robinhood restricted trading for Thursday on its mobile app. (Spencer Platt/Getty Images) |
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Robinhood (Links to an external site.) has raised more than $1 billion from its existing investors, the New York Times reports, after users flooded its trading app seeking to drive up the share price of GameStop (Links to an external site.) and others shorted by hedge funds.
The fundraise coincides with a class-action lawsuit being filed against Robinhood after it restricted trading on the app, drawing the ire of millions of retail investors.
A community of Reddit users is behind the coordinated bull run that has led to extreme stock market volatility over the past several days. The activity has put pressure on Robinhood to pay those who are owed money from their trades while making sure it has enough cash for its clearing facility. Sequoia Capital (Links to an external site.) and Ribbit Capital (Links to an external site.) are said to be among the investors contributing to the fresh round.
On Thursday morning, Robinhood restricted trading in the stock of 13 companies, including GameStop, AMC Entertainment (Links to an external site.) and BlackBerry (Links to an external site.), only allowing users to close out their positions. Robinhood co-founder Vladimir Tenev (Links to an external site.) later tweeted that the app would allow limited buys of those companies' stocks. Other major online brokerages such as Charles Schwab (Links to an external site.)'s TD Ameritrade (Links to an external site.) and Interactive Brokers Group (Links to an external site.) also restricted trading of certain companies' stocks.
The lawsuit, filed in the Southern District of New York, claims that by restricting retail investors' access to trading amid a meteoric stock-price rise in companies like GameStop and AMC, Robinhood manipulated the open market. Several other federal lawsuits have reportedly been filed against Robinhood.
The stock kerfuffle has also drawn the eyes of several lawmakers. Rep. Alexandria Ocasio-Cortez of New York tweeted about the need to know more about Robinhood's decision to curb trading. And lawmakers in the House and Senate have pledged to hold hearings on the recent market occurrences. |
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