our top story robin hood ceo refuting
any type of hedge fund conspiracy theory
as the company is now fighting
to stay on its feet charlie gasparino
has the latest on the company's future
charlie they're saying you know this was
all about the volatility we saw we
needed to raise capital
to make sure we could cover the trades
i'll address that in a second i want to
get to the breaking news here and then
we can go into
some of the mechanics that force them
essentially to lock out
uh trading or at least selling uh buying
stock of gamestop and a few others uh
here's what we do know from people
inside robinhood that the plans for an
ipo which
they were planning to go public sometime
this year amid the massive growth
of users that they've had i mean they
started at 1 million users and
by the summer they were at 13 million i
don't know the exact number right now
but you could that type of exponential
growth fuels
ipo chatter they were considered an ipo
sometime this year
from what i understand it's been put on
hold uh put off put on hold
maybe this is uh dog bites man story but
they they are focusing on
the issue at hand not an ipo but
surviving the next couple of weeks which
is
which has put a pretty uh immense strain
on this company
in terms of capital and the ability to
settle
massive amounts of trades we should
point out that robin hood is not as big
as a morgan stanley or goldman sachs or
merrill lynch which is uh
under the umbrella of bank of america
which acts which has access
to gazillions of dollars of capital uh
this is an app
it's a broker dealer but it's a smallish
one and here's exactly what happened
and i'll tell you you know you can you
can fault the company
you can fault the you know not planning
well
but the conspiracy theory is absurd and
here's why
on wednesday of last week they had to
put up capital of something like
200 million dollars to settle trades
when the influx of trading began with
gamestop
and don't don't don't hold me to uh hold
me
on the um on the exact days but
follow my logic here and my reporting
when the influx of training came in
dtcc which which was which must clear
all trades in the markets came out and
said
no no we're charging you more to handle
these trades
about three or four times as much and
that's where the capital level
came into play so what they did was
that's when they were essentially forced
before they raised capital they were
forced to
stop the selling excuse me the buying of
these shares you can still sell them
you just can't buy them and that's
exactly what happened
that's why they waited to thursday or
friday i can't remember when they raised
a billion dollars if it was friday
uh to raise the money because their
their up charge from dtcc
came later in the week and that's what
forced them
a to stop trading those stocks or at
least trading something trading one side
of it you could still
sell you couldn't buy but that's what
forced them to raise money and they've
raised even more money now
as a try to tell the market that it does
have investors and they are also
planning for a bumpy road ahead
uh this is a very serious situation for
robin hood
it's a gr great business model it's it
has huge growing pains and we're seeing
it right now
in terms of an ipo um again uh
they are what i am hearing from
internally that they're putting
that off at least the broad talk of it i
mean they were moving forward with it
potentially sometime this year i'm
pretty sure they engaged investment
bankers
uh but that's that's off until they get
through this part and you know listen if
you talk to them internally they think
they they got enough money they have
enough capital
uh but you know there is still people
are still saying that this is still a
difficult situation to get through
but the the whole notion of a conspiracy
theory that
they went out there and stopped the
training of these stocks to to help
their buddies on wall street is is is
absurd
on so many levels including including
what we do know about the dtcc and and
how they
uh up charged uh the settlement capital
requirements
and it's interesting on that level it's
absurd charlie that the ceo
is getting out there and he wants to
make sure that that messaging is out
there so people understand
what happened because even if you put
this ipo off um
they want to make sure from a pr
standpoint that people don't think um
you know that they were doing something
nefarious and and it's also interesting
in the light of after the pandemic or
when the pandemic started that they were
seen as sort of this
this success story this win story
because they were seeing so much trading
activity so
they're trying to manage the black eye
there