Robinhood says it is in 'strong position' to face market events after GameStop rally
Robinhood Markets Inc on Tuesday highlighted steps it has taken to avoid imposing trading restrictions and said it was in a "strong position" to support customers through unlikely market events, in a blog post published almost one year after a social-media-fueled rally that rattled markets.
The online trading platform, which helped pioneer commission-free trading, and several other brokerages on Jan. 28, 2021, restricted trading in GameStop and a handful of other "meme" stocks as the regulatory deposit requirements for settling the securities skyrocketed during the rally driven by retail investors.
Robinhood said in Tuesday's blog post that its net capital position was US$2.7 billion, more than 25 times what is currently required by the U.S. Securities and Exchange Commission.
Those restrictions had infuriated clients trying to buy and sell the "meme" stocks.
Early this year, Robinhood asked a federal judge in Miami to dismiss a lawsuit alleging it engaged in fraud and market manipulation when it restricted trading in the stocks.
Robinhood last year also said it had increased the size of its customer support team and introduced 24-hour customer phone support, seven days a week.
Analysts on average expect Robinhood to report a $355 million loss when it posts its December-quarter results on Thursday after the bell.
Following a slowdown in stock market trading by retail investors, shares of Robinhood, which went public last July, have fallen by about 66% from its IPO price.
(Reporting by Amruta Khandekar; Additional reporting by Noel Randewich in Oakland, California; Editing by Leslie Adler)