On the heels of record demand from retail investors and enormous controversy after it limited trading of stocks stock like GameStop, AMC Entertainment and BlackBerry on Thursday, Robinhood is raising billions of dollars in additional funds to buffer against a cash crunch.
The trading unicorn closed an additional $1 billion in funding over the weekend, two sources tell Forbes, on top of a $1 billion cash injection it raised last week. Robinhood is also in talks to raise a third tranche of funding of up to $1 billion, on top of the $2 billion in new cash it’s pulled in, taking its total for the week to as much as $3 billion, the sources say. Robinhood’s new cash is coming in the form of convertible notes, which value the online brokerage at a cap of up to $30 billion, or a 30% discount in an eventual initial public offering.
After publication, Robinhood sent out a press release confirming it’s raised a total of $3.4 billion over the past week. “With this funding, we’ll build and enhance our products that give more people access to the financial system,” said Robinhood in its release. “We’re confident that Robinhood will emerge stronger through this phase of growth and unprecedented demand,” added Micky Malka, managing partner of Ribbit Capital, a venture capital firm that participated in the fundraising.
The large injection of capital, mostly from existing investors, comes as Robinhood has hit record downloads in recent days.
On Thursday, the day Robinhood placed trading restrictions and generated outcry from politicians on both sides of the aisle and celebrities like comedian Jon Stewart, Robinhood’s app was downloaded 700,000 times, compared to 11,000 users who canceled their accounts, according to the sources. On Friday, the app reached about 1 million downloads in a single day. By comparison, over the month of December, Robinhood was downloaded by 800,000 new users combined.
From the coronavirus pandemic, to last week’s mini-market meltdown, Robinhood rarely lets a good crisis go to waste.
Read the full profile on Forbes: https://www.forbes.com/sites/elizahaverstock/2021/02/01/exclusive-robinhood-secures-another-1-billion-in-funds-and-is-in-talks-for-more-as-downloads-hit-record-1-million-per-day/?sh=3ae9590a3005
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