Article Image
IPFS News Link • Stock Market

Cash-Strapped Robinhood Scrambles To Raise $1 Billion From The Rich

• Zero Hedge - Tyler Durden

After years of carefully building its brand and reputation, Robinhood, the stock-trading app that helped invent the no-fee commission, is on the verge of collapse as it faces a mortal threat for any financial company: a bank - or in this case a brokerage run - as thousands of its core users threatened to abandon the platform after RH halted trades in shares of Gamestop, AMC and other shares that had become part of a Reddit-inspired populist revolt against the hedge fund community.

Immediately, the move sparked a wave of rumors which verged on (what some might call) conspiracy: Dependent on HFT market-makers like Citadel for most of its revenue, Robinhood was cutting off the bulls who were bidding Gamestop and a handful of other popular hedge fund shorts into the stratosphere in service to its "masters".

Robinhood wasn't the first mover: As we pointed out the other day, TDAmeritrade was the first to make the "unprecedented" move. As we suspected, it was almost immediately followed by the rest of the major day-trading brokerages.

However, as the day progressed the situation became clearer, Robinhood was in trouble.