Robinhood drew its entire $200 million credit facility from Barclays Plc, Citigroup Inc. and JPMorgan Chase & Co., according to people familiar with the matter. It made the move just as fears of the coronavirus set off more than two weeks of violent market swings and heavy volume, during which Robinhood’s trading platform suffered three significant outages.
“Our capital position remains strong,” the Menlo Park, California-based firm said in an emailed statement, saying the decision to borrow predated and was entirely unrelated to the outages. “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.”
It said it’s not unusual for companies to take precautionary measures during such market conditions.
“Companies don’t tap their credit line unless they need to,” said David Ritter, an analyst at Bloomberg Intelligence, who spoke generally about the issue without commenting directly on Robinhood. When companies do, it’s “perhaps not a good signal with regard to their cash burn, which could make creditors nervous.”