The markets are waiting for something – but the battle for the hearts and minds of retail traders is already on

A company that makes milk from oats went public on Thursday and almost immediately climbed more than 30% as investors decided they wanted to digest the stock like a dairy-hungry vegan.

Oatly is OTLY,
+ 11.19%
the traditional IPO offering was a big win for plant-based foods and anyone fed up with PSPCs and direct listings, but it also served as a reminder that the volume of traders involved in the manic pressure January on GameStop GME,
+ 3.70%,
AMC Entertainment AMC,
-3.75%
and other stocks of memes have dwindled – despite some recent signs of life. However, the fervor among these retail players still in the markets remains as fiery as it was in the middle of winter and the no-cost trading apps designed to serve them are now competing to win their business. , their confidence and the next generation of gamers are now almost guaranteed to follow.

At the center of it is the Robinhood trading app. After fundamentally changing the game by offering clients free trading via an aggressive payment model for order flow, the millennial platform has forced more traditional brokerages to do the same in 2019, not if only to avoid hemorrhaging clients and losing a whole new generation of traders. .

Robinhood drove this retail zeitgeist to a valuation of nearly $ 40 billion at the start of 2021 before the unprecedented rampage of retail traders in January forced him to halt trading on GameStop and other memes stocks. it had incubated, angering the memes stock traders who had made it such a phenomenon. They immediately came to see the app as a tool of a larger conspiracy, being the puppet of hedge funds and market makers who were short and paid for the right to execute Robinhood trades.

After vocal denials of any wrongdoing by Robinhood and its market makers, and multiple Congressional hearings on kerfuffle, the Reddit forums are still simmering rage against the company. While retail traders have moved away from the app, they have also moved away from r / WallStreetBets, the internet chart that gave rise to the whole movement of memes stocks, looking for more discussion threads. specific and less exploitable.

On the new subreddits dedicated to stocks and individual ideas, countless threads are devoted to teaching retail traders how to move their accounts to other no-cost platforms like Schwab, Vanguard or Fidelity, the same ones that have been forced by Robinhood in 2019.

“People hate Robinhood,” said Travis Rehl, a retail trader and the founder of HypeEquity, a platform that compiles social media activity on individual stocks. “You see a post on social media where someone is sharing their Robinhood screen and I guarantee the comments are ‘You must leave Robinhood. “

On Tuesday, Fidelity took the first step in what could be the industry’s revenge on Robinhood.

Since Robinhood has proven that it is inevitable for curious teens to experience stocks, Fidelity has capitalized on its relative age and wisdom by providing parents with a place to let their itchy offspring try out stock trading in a safer environment. .

“Parents and guardians with a Fidelity account can work with their teen to create the youth account and engage in financial learning together,” the company said in a statement announcing its simple Fidelity Youth account, a product for 13 to 17 year olds. designed to give “the teenager hands-on experiences and help build better financial habits as they get older”.

But don’t count Robinhood yet.

Also on Thursday, Robinhood announced that its users will now be able to buy pre-IPO stocks in some companies, breaking down what it sees as another barrier between institutional and retail traders.

Profiting from IPOs is indeed an advantage for the big banks and the big funds which are able to become involved in the subscription of an offer or to commit enough capital to play a key role. Robinhood clearly sees giving Regular Joes a chance to get stock ahead of the post-IPO pop as added value.

That said, Robinhood is not yet underwriting any deals and will be relying on deals with companies to use them as a marketing tool for their IPOs. Fintech Financial Services Platforms SoFi, which underwrites public offerings, began offering its own clients early access to IPOs in March.

Robinhood was not in the Oatly offering, but on Thursday it announced that its users could start applying for a chance to buy a pre-public stake in medical scrub maker Figs when it goes public in the coming weeks. . It will test customers’ appetites for a medical equipment maker as a unique international pandemic ends and increasingly savvy investors try their hand at direct listings and increasingly PSPCs. popular.

Retail traders are also braving the inherent risk of building up in volatile pre-IPO stocks in an environment where even brand new public companies are diving into the crowded convertible bond market.

All of this sets the stage for next week after the tech trading resumes that aided the Nasdaq Composite COMP,
-0.48%
to break a 4-week losing streak despite the S&P 500 SPX index,
-0.08%
and Dow DJIA,
+ 0.36%
each posting a second consecutive week of losses, making it four out of five weeks for the blue chip Dow Jones.

With less mobile economic data expected in the coming days, the battle to grab the attention of retail traders could still grab the attention of investors in a quiet week in which discussions over asset purchases from the Reserve federal government, new COVID vaccine data, and speculation about the strength of the economy’s reopening over the summer will be key factors in guiding avid traders in direction.


Source link

About Arla Lacy

Check Also

In depth: Citadel Connect and Dark Pools discovered

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please review …