Popular trading app Robinhood reportedly maxed out its credit line during market upheaval
Robinhood reportedly maxed out its $200 million credit line amid market turbulence late final month, although the agency stated it later returned the capital it tapped.
The firm – which pioneered zero-commission inventory trading within the type of an app – is understood for its 10 million-strong consumer consumer base and millennial attraction. But its customers have cried foul as the corporate struggled to remain on-line during current coronavirus-triggered market upheaval. The app suffered from three outages previously two weeks, most not too long ago on Monday.
As Bloomberg reported Tuesday, the 17-hour outage final week was the results of a software program difficulty tied to unusually excessive trading exercise. But the agency continues to be investigating what triggered Monday’s outage. According to a press release to Bloomberg, Robinhood’s platform is now “fully operational” and the crew is working to “enhance [its] service during these historic and unstable market situations.”
Meanwhile, Robinhood withdrew its whole $200 million credit facility from Barclays Plc, Citigroup Inc. and JPMorgan Chase & Co., sources informed Bloomberg.
The agency informed Bloomberg that the choice to max out its credit line had nothing to do with the outrage. “Our capital position remains strong,” stated the assertion. “We determined it was prudent to draw on our credit line during the week of Feb. 24 in light of market volatility. That capital was returned in full last week.”
However, Bloomberg Intelligence analyst David Ritter argued that “companies don’t tap their credit line unless they need to.”
Without commenting on the particular incident, he believes transfer to attract out an organization’s whole credit facility is “perhaps not a good signal with regard to their cash burn, which could make creditors nervous.”