By Alex VIGA, AP Business writer
Popular online trading platform Robinhood said on Monday that a $ 3.4 billion lineup has been lined up by small investors plying shares in GameStop and other stocks to help meet their funding needs amid a spike in trading on Wall Street.
Funds are being provided by Rebate Capital and several other venture capital firms, including Sequoia Capital, Index Ventures and ICONIQ Capital. The $ 3.4 billion figure includes $ 1 billion of funding that Robinhood announced on Friday.
Robinhood was required to secure funds to meet the deposit threshold required by organizations handling trading orders placed by investors on its platform. These firms, known as clearinghouses, execute trades placed on stock brokerages such as Robinhood, and require a higher deposit during 48 hours to reduce their risk, so that this stock is delivered to the buyer and Take the funds to be transferred to the seller. .
Robinhood’s chief financial officer, Jason Warnick, said in a statement, “This round of funding will help us to meet our growth and demand for our platform.”
Investors of social media and online forums such as Reddit have been cheering each other on shares in GameStop, AMC Entertainment and others in recent weeks. Large institutions, including some hedge funds, had placed bets on stocks that were falling, causing billions of losses as the stock skyrocketed.
Speculative mania has put pressure on Robinhood and other stock brokerages to keep up with traffic on their online platforms. Last week, Robinhood, Charles Schwab and other retail brokerages placed limits on trading GameStop, AMC, Express and other stocks popular with small investors. The move led to a rapid return of customers and some MPs claimed that small investors were being unfairly harassed.
Robinhood, located in Menlo Park, California, Initially limited investors only to sell their positions, not to open new ones. For this, users should keep their own funds instead of using borrowed funds for certain trades.
On Monday, the company was limiting users to purchase four shares and five option contracts in GameStop. Traders willing to snap AMC Entertainment are limited to 75 shares or option contracts.
GameStop shares vaulted down from $ 350 to close at $ 350 compared to the previous month. The videogame retailer stood at $ 234 a share in Monday trading. Movie theater operator AMC was running at around $ 2 last April and soared to about $ 20 last week. It traded at around $ 13.80 Monday.
Copyright 2021 associated Press. All rights reserved. This content may not be published, broadcast, rewritten or redistributed.