Robinhood raises another $2.4B as CEO called to testify before Congress

Brokerage platform Robinhood, which has suffered its share of scrutiny after it blocked retail investors from trading GameStop, AMC Entertainment, and other shorted stocks, on Monday Feb. 1 confirmed that it raised $2.4B from shareholders. This comes after investors put down $1B last week to help it cover collateral requirements related to the recent trading surge.

Why should we care?
The company said most of the massive infusion of funding will be used as collateral at the industry’s central clearinghouse, the Depository Trust & Clearing Corporation. The funding will also allow the company to remove trading restrictions it imposed during the height of the trading frenzy that drew criticism from retail investors. Robinhood is also reportedly in talks with banks about raising $1B in debt. As investors work to keep the company afloat, the platform continues to add users, including 600,000 downloads on Friday. But Robinhood is also battling to salvage its reputation as it gets pilloried with one-star reviews and attacks from a broad constituency of consumers. How Robinhood presents its case as it is called to testify before Congress will be key. The company’s CEO Vlad Tenev is expected to testify before the House Financial Services Committee on Feb. 18 as lawmakers investigate. Tenev will need to convince House members that the company acted in its customers’ interests, and not to protect Citadel, the trading firm owned by hedge fund billionaire Ken Griffin with which it has a partnership. Robinhood reportedly sells order flow to electronic trading giants, including Citadel.