Robinhood looks to raise more debt as frenzied retail trading continues, report says

• Robinhood is looking to raise $1 billion of debt as it struggles to keep up with orders for heavily shorted stocks, Reuters reported Tuesday.
• Discussions with banks include possibly expanding existing credit lines or arranging new ones.
• The financing is separate from the $3.4 billion infusion the online brokerage raised from investors in recent days.
• Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Robinhood is looking to raise $1 billion more of debt as it struggles to keep up with orders for heavily shorted stocks discussed in Reddit forum WallStreetBets, Reuters first reported. Discussions with banks have included expanding credit lines or arranging new ones.

The capital to be raised will be separate from the $3.4 billion infusion the online brokerage firm collected from its existing investors, Robinhood reported on Monday. In the span of a few days since January 29, the Menlo Park, California-based company has raised a record amount of cash since its founding in 2013.

Read more: Robinhood raises additional $2.4 billion as app continues to deal with Reddit-trader frenzy

Robinhood said a majority of the initial funds raised will be used as collateral for the Depository Trust & Clearing Corp, Bloomberg reported.

Robinhood CEO Vlad Tenev told Elon Musk on Clubhouse, an invite-only social networking app, on Sunday that Robinhood only had $2 billion in venture capital raised at that point. Last week, the National Securities Clearing Corporation requested the trading app to come up with a $3 billion deposit in order to cover trading risks. The clearing agency reduced the figure to $700 million when Robhinhood said it would restrict trading of popular stocks including GameStop.

The move to limit trading of certain stocks led to heightened scrutiny of the popular retail-trading app. Robinhood has eased restrictions but customers are still restricted to buying a set number of shares of some companies.

The drama has the potential to delay the company's planned initial public offering this year, Bloomberg reported

Robinhood has gained traction among younger retail investors thanks to its easy to use interface and commission-free investing. It was founded in 2013 by two Stanford University graduates who aimed to "democratize finance for all."