{"id":50766,"date":"2021-02-01T16:39:58","date_gmt":"2021-02-01T20:39:58","guid":{"rendered":"http:\/\/stateofthenation.co\/?p=50766"},"modified":"2021-02-01T16:39:58","modified_gmt":"2021-02-01T20:39:58","slug":"how-did-robinhood-just-get-a-2-4-billion-infusion-when-theyre-crashing-and-burning-in-real-time","status":"publish","type":"post","link":"https:\/\/stateofthenation.co\/?p=50766","title":{"rendered":"How did Robinhood just get a $2.4 billion infusion when they&#8217;re crashing and burning in real time?!"},"content":{"rendered":"<h1>Robinhood Got Additional $2.4 Billion Bailout Over The Weekend; IPO Plans &#8220;On Hold&#8221;<\/h1>\n<p><!--more-->ZeroHedge.com<\/p>\n<p><strong>Update 1215 EST:<\/strong>\u00a0In a development that will come as surprise to nobody, Charlie Gasparino reports that Robinhood&#8217;s plans have been put on hold, noting that\u00a0 the company has to \u201cfocus on surviving the current drama over trading of stocks and settlement issues.&#8221;<\/p>\n<div class=\"twitter-tweet twitter-tweet-rendered\"><iframe id=\"twitter-widget-0\" class=\"\" title=\"Twitter Tweet\" src=\"https:\/\/platform.twitter.com\/embed\/index.html?dnt=false&amp;embedId=twitter-widget-0&amp;frame=false&amp;hideCard=false&amp;hideThread=false&amp;id=1356289306466406401&amp;lang=en&amp;origin=https%3A%2F%2Fwww.zerohedge.com%2Fmarkets%2Fpeople-demand-answer-elon-musk-grills-robinhood-ceo-vlad-tenev-platforms-trading&amp;partner=tweetdeck&amp;siteScreenName=zerohedge&amp;theme=light&amp;widgetsVersion=ed20a2b%3A1601588405575&amp;width=550px\" frameborder=\"0\" scrolling=\"no\" allowfullscreen=\"allowfullscreen\" data-tweet-id=\"1356289306466406401\" data-mce-fragment=\"1\"><\/iframe><\/div>\n<p>While it is clear that Robinhood will never IPO now, the biggest question is whether the loss of clients is big enough that the latest $4 billion in new capital will itself be impaired in the coming weeks, and what happens then?<\/p>\n<div class=\"Advert_desktop__1J5vD Advert_tablet__3QEBr Advert_mobile__1rlLc Advert_align__N0_fw Advert_placement__1I4yb\"><\/div>\n<div class=\"twitter-tweet twitter-tweet-rendered\"><iframe id=\"twitter-widget-1\" class=\"\" title=\"Twitter Tweet\" src=\"https:\/\/platform.twitter.com\/embed\/index.html?dnt=false&amp;embedId=twitter-widget-1&amp;frame=false&amp;hideCard=false&amp;hideThread=false&amp;id=1356292147658579972&amp;lang=en&amp;origin=https%3A%2F%2Fwww.zerohedge.com%2Fmarkets%2Fpeople-demand-answer-elon-musk-grills-robinhood-ceo-vlad-tenev-platforms-trading&amp;partner=tweetdeck&amp;siteScreenName=zerohedge&amp;theme=light&amp;widgetsVersion=ed20a2b%3A1601588405575&amp;width=550px\" frameborder=\"0\" scrolling=\"no\" allowfullscreen=\"allowfullscreen\" data-tweet-id=\"1356292147658579972\" data-mce-fragment=\"1\"><\/iframe><\/div>\n<p>* * *<\/p>\n<p><strong>Update 1134 EST<\/strong>: Confirming the rumors that CNBC&#8217;s David Faber reported earlier,\u00a0<a href=\"https:\/\/www.wsj.com\/articles\/robinhood-raises-another-2-4-billion-from-shareholders-11612197680?st=7f9b81340bghdn0&amp;reflink=article_copyURL_share\">The Wall Street Journal reports<\/a>\u00a0that Robinhood has raised another $2.4 billion from investors. That is on top of the $1 billion raised last Thursday, and on top of the $600MM revolver drawdown previously, for a total of $4 billion in just 3 business days.<\/p>\n<p><a href=\"https:\/\/blog.robinhood.com\/news\/2021\/2\/1\/robinhood-raises-34-billion-to-fuel-record-customer-growth\">Robinhood just issued a statement to confirm WSJ&#8217;s reporting:<\/a><\/p>\n<blockquote><p><strong>Robinhood has raised $3.4 billion to continue to invest in record customer growth, including $1 billion in funding announced on January 29.<\/strong>\u00a0This funding is a strong sign of confidence from investors and will help us build for the future and continue to serve people through the exponential growth we\u2019ve seen this year.<\/p>\n<p>We\u2019re witnessing a movement of everyday people taking control of their own financial futures,\u00a0 many investing for the first time through Robinhood. With this funding, we\u2019ll build and enhance our products that give more people access to the financial system.<\/p>\n<p>We will also continue to invest in expanding access to financial literacy in service of our mission to democratize finance for all. We look forward to sharing more details in the coming months.<\/p>\n<p><strong>The round was led by Ribbit Capital, with participation from existing investors including ICONIQ, Andreessen Horowitz, Sequoia, Index Ventures, and NEA with terms being finalized.<\/strong><\/p>\n<p>\u201cRobinhood has served millions of people who have felt left behind by America\u2019s financial system.\u00a0<strong>We\u2019re confident that Robinhood will emerge stronger through this phase of growth and unprecedented demand,<\/strong>\u201d said Micky Malka, Managing Partner, Ribbit Capital.<\/p>\n<p>\u201c<strong>This round of funding will help us scale to meet the incredible growth we\u2019ve seen and demand for our platform.\u00a0<\/strong>We are humbled by our customers\u2019 response to our offering, and remain inspired by everyday people taking control of their financial futures,\u201d said Jason Warnick, CFO, Robinhood.<\/p><\/blockquote>\n<p>The $4.0 billion raised since last Thursday is\u00a0<strong>more than the company has raised in its entire prior existence, and amounts to more than half of the\u00a0<a href=\"https:\/\/cdn.robinhood.com\/assets\/robinhood\/legal\/RHS%20Unaudited%20Statement%20of%20Financial%20Condition%2006.30.20.pdf\">current balance sheet<\/a>&#8230;<\/strong><\/p>\n<p>The $4.0 billion raised since last Thursday is\u00a0<strong>more than the company has raised in its entire prior existence, and amounts to more than half of the\u00a0<a href=\"https:\/\/cdn.robinhood.com\/assets\/robinhood\/legal\/RHS%20Unaudited%20Statement%20of%20Financial%20Condition%2006.30.20.pdf\">current balance sheet<\/a>&#8230;<\/strong><\/p>\n<p>The $4.0 billion raised since last Thursday is\u00a0<strong>more than the company has raised in its entire prior existence, and amounts to more than half of the\u00a0<a href=\"https:\/\/cdn.robinhood.com\/assets\/robinhood\/legal\/RHS%20Unaudited%20Statement%20of%20Financial%20Condition%2006.30.20.pdf\">current balance sheet<\/a>&#8230;<\/strong><\/p>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/2021-02-01_8-53-16.jpg?itok=ZDkrYkWF\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/2021-02-01_8-53-16.jpg?itok=ZDkrYkWF\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/2021-02-01_8-53-16.jpg?itok=ZDkrYkWF\" alt=\"\" width=\"500\" height=\"534\" data-entity-type=\"file\" data-entity-uuid=\"22e20bb4-729f-4e82-8627-0ede87f0aea9\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<div class=\"Advert_tablet__3QEBr Advert_mobile__1rlLc Advert_align__N0_fw Advert_placement__1I4yb\"><\/div>\n<p>Especially, given the latest valuation:<\/p>\n<div class=\"twitter-tweet twitter-tweet-rendered\"><iframe id=\"twitter-widget-2\" class=\"\" title=\"Twitter Tweet\" src=\"https:\/\/platform.twitter.com\/embed\/index.html?dnt=false&amp;embedId=twitter-widget-2&amp;frame=false&amp;hideCard=false&amp;hideThread=false&amp;id=1355902326159122443&amp;lang=en&amp;origin=https%3A%2F%2Fwww.zerohedge.com%2Fmarkets%2Fpeople-demand-answer-elon-musk-grills-robinhood-ceo-vlad-tenev-platforms-trading&amp;siteScreenName=zerohedge&amp;theme=light&amp;widgetsVersion=ed20a2b%3A1601588405575&amp;width=550px\" frameborder=\"0\" scrolling=\"no\" allowfullscreen=\"allowfullscreen\" data-tweet-id=\"1355902326159122443\" data-mce-fragment=\"1\"><\/iframe><\/div>\n<p>This helps explain why this morning has seen Robinhood reduce the number of securities on its restricted list and increased the number of shares that users can buy on some of the highest risk stocks (e.g. clients can now buy 4 GME shares, not just 1).<\/p>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" alt=\"\" width=\"500\" height=\"310\" data-entity-type=\"file\" data-entity-uuid=\"ca347d5f-b697-4a44-967c-1333112de351\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" alt=\"\" width=\"500\" height=\"310\" data-entity-type=\"file\" data-entity-uuid=\"ca347d5f-b697-4a44-967c-1333112de351\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/2021-02-01_8-49-19.jpg?itok=vm-4yuDK\" alt=\"\" width=\"500\" height=\"310\" data-entity-type=\"file\" data-entity-uuid=\"ca347d5f-b697-4a44-967c-1333112de351\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<p>*\u00a0 *\u00a0 *<\/p>\n<div class=\"Advert_tablet__3QEBr Advert_mobile__1rlLc Advert_align__N0_fw Advert_placement__1I4yb\"><\/div>\n<p><strong>Update 0931 EST:<\/strong>\u00a0CNBC&#8217;s David Faber says on-air this morning he&#8217;s &#8220;hearing Robinhood is probably going to need more capital&#8221;.<\/p>\n<p>Forbes\u00a0<a href=\"https:\/\/www.forbes.com\/sites\/siladityaray\/2021\/02\/01\/robinhood-ceo-dismisses-elon-musks-conspiracy-theories-about-gamestop-trade-limits\/?sh=4186070b5e58\">reports<\/a>\u00a0that Tenev told Elon Musk over the weekend he had &#8220;no reason&#8221; to believe that &#8220;something shady&#8221; went down involving Robinhood and Citadel last week. He told Musk: &#8220;You\u2019re getting into conspiracy theories a little bit.\u201d<\/p>\n<p>*\u00a0 *\u00a0 *<\/p>\n<p>Today in &#8220;<em>billionaires who have abused the system but are now trying to present themselves as modern day heroes<\/em>,&#8221; news, Elon Musk took to Clubhouse yesterday to interview Robinhood CEO Vlad Tenev. Tenev has been the center of controversy after the commission free broker started limiting trades in names like GameStop and AMC, among several dozen other stocks, last week.<\/p>\n<p>Jokingly referring to Tenev as &#8220;Vlad the stock impaler&#8221;, which is hilarious given the fact\u00a0that Robinhoodies keep a perpetual dumb money bid under Tesla, Musk grilled the CEO on what happened with Robinhood in the week prior.<\/p>\n<p>Jokingly referring to Tenev as &#8220;Vlad the stock impaler&#8221;, which is hilarious given the fact\u00a0that Robinhoodies keep a perpetual dumb money bid under Tesla, Musk grilled the CEO on what happened with Robinhood in the week prior.<\/p>\n<p>Jokingly referring to Tenev as &#8220;Vlad the stock impaler&#8221;, which is hilarious given the fact\u00a0that Robinhoodies keep a perpetual dumb money bid under Tesla, Musk grilled the CEO on what happened with Robinhood in the week prior.<\/p>\n<p>\u201cThe people demand an answer and they want to know the truth,&#8221; Musk, borrowing the faux-populist billionaire crown from Chamath Palihapitiya for the evening,\u00a0said to Tenev.<\/p>\n<div class=\"Advert_tablet__3QEBr Advert_mobile__1rlLc Advert_align__N0_fw Advert_placement__1I4yb\"><\/div>\n<p>Tenev explained:\u00a0\u201cBasically Wednesday of last week we just had unprecedented volume, unprecedented load on the system. A lot of these, you know, so-called meme stocks were, you know, going viral on social media, and people were joining Robinhood and there was a lot of net buy activity on them.\u201d<\/p>\n<p>Tenev said that &#8220;while he was asleep, at 3:30 a.m. Pacific time last Thursday, Robinhood\u2019s operations team got a file from the National Securities Clearing Corporation (NSCC),&#8221; according to\u00a0<a href=\"https:\/\/www.marketwatch.com\/story\/tesla-ceo-elon-musk-calls-robinhood-ceo-vlad-the-stock-impaler-and-grills-him-over-the-gamestop-saga-11612180184\">MarketWatch<\/a>.<\/p>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/tenev.jpg?itok=p2I40FMF\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/tenev.jpg?itok=p2I40FMF\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/tenev.jpg?itok=p2I40FMF\" alt=\"\" width=\"500\" height=\"312\" data-entity-type=\"file\" data-entity-uuid=\"416586f6-4e3c-4628-ab2f-70448de3bd70\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<p>He continued:\u00a0\u201cWe have to put up money to the NSCC based on some factors including things like the volatility of the trading activity into certain securities. And this is the equities business so it\u2019s based on, stock trading and not options trading or anything else. So they give us a file with the deposit and the request was around $3 billion, which is, you know, about an order of magnitude more than what it typically is.\u201d<\/p>\n<p>He continued:\u00a0\u201cWe have to put up money to the NSCC based on some factors including things like the volatility of the trading activity into certain securities. And this is the equities business so it\u2019s based on, stock trading and not options trading or anything else. So they give us a file with the deposit and the request was around $3 billion, which is, you know, about an order of magnitude more than what it typically is.\u201d<\/p>\n<p>He continued:\u00a0\u201cWe have to put up money to the NSCC based on some factors including things like the volatility of the trading activity into certain securities. And this is the equities business so it\u2019s based on, stock trading and not options trading or anything else. So they give us a file with the deposit and the request was around $3 billion, which is, you know, about an order of magnitude more than what it typically is.\u201d<\/p>\n<p>When Musk asked about the $3 billion number, Tenev responded:\u00a0\u201cRobinhood up until that point has raised around $2 billion in total venture capital, up until now. So it\u2019s a big number, like $3 billion is a large number, right?\u00a0I wouldn\u2019t impude shadiness to it or anything like that, and actually you know the NSCC was reasonable\u2026they worked with us to actually lower it. So it was unprecedented activity.&#8221;<\/p>\n<div class=\"Advert_tablet__3QEBr Advert_mobile__1rlLc Advert_align__N0_fw Advert_placement__1I4yb\"><\/div>\n<p>The demand was eventually dropped to $1.4 billion, Tenev said. After proposing to limit the most volatile stocks, Robinhood was able to get the NSCC to drop the number to $700 million, he claimed.\u00a0\u201cPart of what\u2019s been really difficult is Robinhood stands for democratizing access for stocks, but we had no choice in this case,\u201d he said, completing the blame-pivot to the NSCC.<\/p>\n<p>He then explained why Robinhood allowed selling, but not buying:\u00a0\u201cThe fact of the matter is, people get really pissed off if they\u2019re holding stocks and they want to sell and they can\u2019t. So that\u2019s categorically worse.\u201d<\/p>\n<p>\u201cBasically, what people are wondering is did you sell your clients down the river,\u201d Musk concluded. Tenev responded by saying the cash raised will help them lift restrictions heading into the new week. \u201cI think the question is, will the limits be high enough to the point where, they won\u2019t impact 99.9-plus percent of customers. So if someone were to deposit $100 billion and decide to trade in one stock that wouldn\u2019t be possible,\u201d he concluded.<\/p>\n<p>You listen to the full interview here:<\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/1L8mI0i4XSA\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p>___<br \/>\n<a href=\"https:\/\/www.zerohedge.com\/markets\/people-demand-answer-elon-musk-grills-robinhood-ceo-vlad-tenev-platforms-trading\">https:\/\/www.zerohedge.com\/markets\/people-demand-answer-elon-musk-grills-robinhood-ceo-vlad-tenev-platforms-trading<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Robinhood Got Additional $2.4 Billion Bailout Over The Weekend; IPO Plans &#8220;On Hold&#8221;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-50766","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/posts\/50766","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50766"}],"version-history":[{"count":0,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/posts\/50766\/revisions"}],"wp:attachment":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}