The popular investment app Robinhood, which is currently in the spotlight because of the madness surrounding gaming chain trading GameStop, has raised more than USD 1 billion of additional capital to strengthen its financial position. Robinhood also says that the restrictions in stock trading as a GameStop will be partially lifted again after a big fuss by app users and also Politics in Washington.
Robinhood decided on Thursday that his customers could no longer buy up GameStop and certain other companies after the Stormy course of the last few days. In doing so, co-founder and topman Vlad Tenev referred to the capital requirements to be met by the app as an intermediary for stock trading. To allow the mass purchase of GameStop shares to continue undisturbed would entail too great a risk. With the extra money, these capital requirements can be met again.
GameStop stock plummeted 44 percent on Wall Street on Thursday due to Robinhood’s trade restrictions. These restrictions only allowed investors to sell shares, but not to buy them. That created anger among many users. GameStop’s course seems to be taking a very strong leap again on Friday, with News that the restrictions are partially lifted. Front runners are more than 100 percent in the plus on the New York Stock Exchange.
Through Robinhood and other investment apps, small investors have recently joined on the online platform Reddit to buy massive shares of GameStop, including, for example, the cinema chain AMC Entertainment. Among other things, they wanted to impose heavy losses on professional investors such as hedge funds that speculate on a fall in prices, so-called shortsellers. In a week, the price of GameStop rose by as much as 1,000 percent thanks to the’Reddit investors’.
Robinhood raised a billion dollars from existing shareholders and would also have raised hundreds of millions in additional bank financing. The company said that the additional capital injection is a sign of confidence in Robinhood and will help with further customer service.
In Washington, the trade restrictions imposed by Robinhood and other investment service providers around GameStop led to fierce criticism from politicians, as it would protect hedge funds. The Congress is now asking for research into the GameStop business and the role of hedge funds in the financial system.
Tesla-topman Elon Musk again made his voice heard on Twitter about GameStop. He tweeted, “Get Shorty,” which means Musk means shortsellers. The maker of electric cars Tesla himself has been the target of shortsellers for many years to Musk’s fury. However, thanks to the massive increase in the price of Tesla’s share, shortsellers lost billions of dollars.