Robinhood fallout sweeps market after firm’s $1 billion lifeline
Annie Massa, Misyrlena Egkolfopoulou, Michelle F. Davis and Matthew Monks
Bloomberg
The Reddit hordes were at it again Friday, once again bidding up shares of GameStop Corp. and warring with hedge funds by seeking out targets such as Siebert Financial Corp. and Twinkie maker Hostess Brands Inc.
Hours after Robinhood Markets said it received a cash infusion of more than $1 billion, having just angered legions of retail investors by imposing a raft of trading restrictions, the Securities and Exchange Commission said it would look to identify potential misconduct and review decisions by brokerages to curtail transactions on certain stocks.
Why Robinhood Had to Risk Infuriating Its Customers
The online broker raised $1 billion to prop itself up. Overcoming customer anger may be harder.
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A protester outside Robinhood’s California headquarters decrying trading limits on GameStop and other stocks. Credit.Ian C. Bates for The New York Times
‘The entire community is outraged’
Robinhood had to raise $1 billion from investors yesterday to help it cover cash demands during the week’s trading frenzy, while traders and lawmakers sharply criticized the online broker for halting some trading in Reddit-touted stocks. In short: The consequences of the mania in GameStop, AMC and other stocks are becoming more concrete and, in Robinhood’s case, more serious.
The Roaring Kitty rally: How a Reddit user and his friends roiled the markets sun-sentinel.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from sun-sentinel.com Daily Mail and Mail on Sunday newspapers.
Robinhood raises $1 billion to counter cash crunch spawned by GameStop trading frenzy
The logo for the Robinhood app on a smartphone.
(Associated Press)
Bloomberg
New York markets had just fired up, and the investing world was tuning in for Thursday’s episode of the continuing drama pitting legions of Robinhood Markets investors versus hedge-fund Goliaths.
But within minutes, a shock wave invisible to the outside world rattled the mechanics of Wall Street, sending Robinhood rushing for more than $1 billion of additional cash. The stock market’s central clearing hub had demanded large sums of collateral from brokerages including Robinhood that for weeks had facilitated spectacular jumps in shares such as GameStop Corp.