Robinhood’s IPO put on hold amid GameStop controversy?

Trading and investing fintech app Robinhood is reportedly shelving its IPO to focus on dealing with the fallout of the GameStop incident…

Robinhood Faces Backlash As GameStop Trading Frenzy Continues | NBC News NOW

NBC’s Ben Popken and CNBC’s Dominic Chu break down what the turbulent trading means for the market, as Robinhood limits trading on eight stocks, including GameStop.
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Robinhood Faces Backlash As GameStop Trading Frenzy Continues | NBC News NOW

GameStop saga is putting Robinhood in a difficult position: NY Times reporter

The retail frenzy and short squeeze saga has been driving trading volume through the roof and there’s no signs of a slow down. Kate Kelly, New York Times reporter, and Rich Repetto, managing director at Piper Sandler, joined “Squawk Box” on Monday to discuss. Subscribe to CNBC Pro to access our live Pro Talk “How to Navigate the Reddit Market Mania” with Fundstrat’s Tom Lee and CNBC’s Mike Santoli: https://cnb.cx/3r7vPrJ

Robinhood will continue to limit trading on Monday in short-squeeze names like GameStop that have experienced explosive rallies and unprecedented volatility over the past week.

Customers can only buy one share of GameStop’s stock and five options contracts. However, the millennial-favored stock trading app did cut down its list of restricted stocks from as many as 50 on Friday to eight starting Monday.

“The table below shows the maximum number of shares and options contracts to which you can increase your positions,” Robinbood said in a updated help center message Sunday. “These limits may be subject to change throughout the day.”

The eight names are GameStop, AMC Entertainment, BlackBerry, Koss, Express, Nokia, Genius Brands International and Naked Brand Group. Robinhood is also limiting buying of options contracts in those securities.

If traders already hold more shares or contracts than the limits listed above, their positions will not be sold or closed, but they will not be able to open new positions, Robinhood said.

The move to extend restrictions came after Robinhood revealed that the central Wall Street clearinghouse mandated a ten-fold increase in the firm’s deposit requirements last week to ensure orderly settlements. Clearinghouses seek to protect investors and the markets by making sure that brokerages have the funds needed for trade settlement, a process that takes two days.

The firm also raised margin requirements, or the amount of money in a client’s account when they will be using leverage to buy a security.

Robinhood raises another $2.4 billion from investors

CNBC’s Kate Rooney reports that Robinhood has raised another $2.4 billion from investors, and looks at who some of those investors are. Subscribe to CNBC Pro to access our live Pro Talk “How to Navigate the Reddit Market Mania” with Fundstrat’s Tom Lee and CNBC’s Mike Santoli: https://cnb.cx/3r7vPrJ

Discount online brokerage Robinhood said Monday it has raised another $2.4 billion from investors amid the extreme bouts of market volatility.

The $3.4 billion it has mobilized since Thursday exceeds the total amount it has raised since its founding in 2013.

“This 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’ve seen this year,” the company said.

“We’re witnessing a movement of everyday people taking control of their own financial futures, many investing for the first time through Robinhood.”

It said it will use the new funding to expand its programs on financial literacy.

“With this funding, we’ll build and enhance our products that give more people access to the financial system,” the company’s statement said.

Robinhood has been in the center of the storm around a move by retail investors over the past week that has squeezed hedge funds that bet big against stocks including GameStop and AMC Entertainment.

As shares in the companies surged, Robinhood placed extreme limits on how much their customers, mainly younger and small-dollar investors, could buy. The company narrowed that list Monday from about 50 to eight.

Investors who had met up online, in particular on Reddit’s WallStreetBets forum, snapped up shares of the companies, forcing some institutional firms into losses. The moves set off a vicious round of volatility on Wall Street that saw the Dow industrials lose close to 3%.

Robinhood and other brokers are required to meet certain deposit requirements from trade clearinghouses. Because of the heavy trading volume, Robinhood said last week it had to impose the restrictions because deposit requirements set by its clearinghouse were much greater that expected.

“We had no choice in this case,” Robinhood co-founder Vlad Tenev said in an Clubhouse discussion with Elon Musk late Sunday Pacific time. “We had to conform to our regulatory capital requirements.”

Robinhood files confidentially for IPO

Kate Rooney reports Robinhood has filed confidentially for an IPO at the Nasdaq. She joins ‘Closing Bell’ with more. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Robinhood has filed confidential paperwork to pursue an initial public offering (IPO), a source familiar with the matter told CNBC on Tuesday.

Bloomberg first reported on the confidential filing.

The company has experienced a whirlwind start to the year as the pandemic helped draw new retail investors to its stock trading app. During a Reddit-fueled trading frenzy in January, Robinhood added 3 million users, JMP Securities estimated.

That boom got Robinhood in hot water when it decided to restrict trading on GameStop, the highly-shorted stock that Reddit traders chose to buy in mass numbers. Robinhood’s CEO Vlad Tenev was hauled before lawmakers along with other executives to testify on the trading frenzy and whether new regulations should be in order.

CNBC reported earlier this month that Robinhood had chosen the Nasdaq for its IPO, according to sources familiar with the matter. Goldman Sachs has been advising the company on the IPO.

Robinhood was founded in 2013 by Tenev and Baiju Bhatt, who were roommates at Stanford. They started in finance selling trading software to hedge funds, before starting Robinhood to develop ways for everyday retail investors to buy and sell stocks without paying commissions.

Robinhood gained popularity among younger crowds by making stock purchases as easy as finding an online date on Tinder. Customers quickly link their bank account information, search for a stock, and swipe up to buy.

Robinhood is one of several platforms that allows customers to buy fractional shares. Instead of buying a single Tesla stock for over $660, a customer could opt to invest $5, $10 or $100 and get a piece of share.

One of its most significant moves came in early 2018, when Robinhood opened the door to crypto. Users can purchase bitcoin, ethereum and numerous other digital currencies on the app the same way they buy stocks.

Prior to the GameStop controversy earlier this year, Robinhood had been valued most recently at about $12 billion in a 2020 financing round. To avoid a liquidity crunch, the company raised $1 billion in February. While the emergency threatened to dampen the company’s valuation, demand in the public markets for all things tech could lead investors to put aside their concerns. Crypto marketplace Coinbase is going public soon and has been valued at $100 billion or more in recent private market trading.

Robinhood counts New York-based D1 Partners, Sequoia, Kleiner Perkins and Google’s venture capital arm, GV among its biggest venture capital investors.

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