GameStop, Dogecoin, and The Rise of Meme Investing: Why Robinhood IPO Could Send Social Investment to Retail
2021 has been a busy year for Robinhood, and the biggest challenge of the year for the investment app is expected to arrive in the coming weeks in the form of its long-awaited IPO. But will Robinhood’s multi-billion dollar issue send social investments to individuals?
Robinhood found himself at the center of a short squeeze surrounding the stock of GameStop memes and found himself embroiled in a war of words with Wall Street mainstays Warren Buffett and Charlie Munger. The app also crashed during a recent bull run on the memes-based cryptocurrency, Dogecoin.
Despite many negative reviews over the year, Robinhood has grown exponentially and established itself as one of the leading online brokers for individual investors.
Robinhood is one of the fastest growing fintech startups and has grown into one of Silicon Valley’s most valuable private unicorns. Since the start of the pandemic, Robinhood has surpassed many other investment app downloads, including that of cryptocurrency giants Coinbase.
With a current valuation of around $ 11.7 billion and major backers like Sequoia Capital and Andreessen Horowitz, NEA, Kleiner Perkins and Alphabet, it is expected that Robinhood’s IPO could lead to a valuation of ‘at least $ 30 billion.
Empower retail investors
Significantly, Robinhood opened its IPO to retail investors as part of the company’s offer to democratize initial public offerings.
The recent announcement of Robinhood’s IPO Access service represents an important step in making IPOs a real investment opportunity for retail investors where, in most cases, initial public offerings tend to be reserved for investors. institutions capable of buying many shares in a single transaction.
Robinhood says its mission is to democratize finance for all. By democratizing IPOs, it appears the company is making waves by opening up areas for investment to new users.
As the investment app usage statistics indicate, 2020 has seen a huge increase in the number of retail investors choosing to invest their finances in stocks and stocks. Maxim Manturov, head of investment research at Freedom Finance Europe, explained that this increase in the volume of investors “actually looks like the consequence of the pandemic and the stimulus plans that followed. This created a pool of funds. that retail investors could start investing in stocks. According to the Fidelity report, there were 26 million retail accounts in 2020, up 17% from 2019, while daily trading volume doubled .
The Robinhood app makes investing a straightforward process that has helped inspire many people around the world to invest their money in stocks. However, these freedoms appear to have led to significant increases in investments in stocks based on memes like GameStop and Dogecoin – indicating that while the brokerage firm plays a vital role in making stocks and IPOs available to everyone , it has also helped leverage certain business models.
Could Robinhood’s IPO Bring More Memes Investment?
Robinhood cashed in at least $ 110 million as a result of the GameStop stock rally even in early 2020. As masses of investors rallied on Reddit to decide to generate a short squeeze on GameStop, we saw the power of the media social causes widespread losses for hedge funds.
While this event was billed as some sort of uprising against the power of hedge funds, many retail investors lost out as they unwittingly bought the top of the GameStop price spike.
The number of fees that Robinhood earned by selling its users’ buy orders to Wall Street companies reached $ 331 million in the first three months of 2021, according to statistics from Alphacution. This figure is significantly higher than the $ 221 million the company made in the last three months of 2020 – it is also significantly higher than the $ 91 million Robinhood earned from the same fees in early 2020. .
Since Robinhood’s pivotal role in shortening GameStop, the platform has also recently crashed as social sentiment for Dogecoin, a cryptocurrency listed on the app and supported by Elon Musk, has grown. reached its climax. As a digital currency that was literally built on a meme in 2013 and hasn’t undergone an update since 2019, Dogecoin represents a perfect example of meme investing.
Despite its fundamentals and a struggling cryptocurrency market over the past two months, the price of Dogecoin has surged throughout 2021 as the coin has seen an increase of nearly 14,000% over a 12-month period.
Robinhood has been confident enough to list Dogecoin since mid-2018, and as investors on the app have increased in recent months, the value of the cryptocurrency has increased as well. With Robinhood’s upcoming Wall Street IPO expected to bring even greater exposure to one of the fastest growing brokerage apps since the start of the COVID-19 pandemic, we may see new investments. in actions based on memes.
It remains to be seen whether social sentiment towards the next asset pump will focus on traditional markets or cryptocurrency, but with the ease with which retail investors can plan for short cutbacks, that’s likely only a question. long before another GameStop case occurs.