Robinhood, the controversial Silicon Valley online broker, has raised another $2.4 billion from shareholders barely days after existing investors pumped in $1 billion into the online brokerage.
The $3.4 billion in combined total funding received within days is more than the company has raised since it was established 8 years ago.
“At this moment, we are witnessing a massive transformation across the financial markets. The intersection of technology, democracy and finance is ushering in an entirely new era of financial participation”, the company said in a blog post on Monday.
The huge infusion will help Robinhood cover a surge in collateral requirements stemming from a spike in trade volumes, the Wall Street Journal reported.
Last week, customers comprising of young investors, celebrities and politicians, flooded Robinhood and other brokerages with orders to buy and sell a handful of popular stocks. The video-game retailer, GameStop topped the list of orders, closing at $325 on Friday. At the same period last year, GameStop traded at only $4 per share. It began this year at under $20 before the sudden spike reaching a record $413.98 as traders on Reddit’s “WallStreetBets” subreddit continued to push it up as their golden goose.
The battered movie-theater chain, AMC Entertainment Holdings Inc., also went up last month by more than 500%.
Robinhood allows its customers to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies on its platform.
The sudden and unexpected surge prompted the clearinghouse that processes and settles the trades to ask for more cash to cover potential losses on the transactions.
Sequoia Capital and Ribbit Capital raised $1 billion for the company last week, according to the New York Times.
Robinhood said on Monday the latest funding was led by Ribbit Capital, with participation from existing investors including ICONIQ Capital, Andreessen Horowitz, Sequoia, Index Ventures and NEA.
The California-based company which was founded in 2013 by Baiju Bhatt and Tenev, has faced some criticisms from regulators about how it operates.