Who are Robinhood investors?

September 06, 2020

 Who are Robinhood investors and are they powering the recent stock market rally?




The global market rally recently has introduced us to a replacement term, 'Robinhood investors'. Who are they? they're retail investors using the trading platform Robinhood, a commission-free trading app that's geared toward millennial investors.


As per the trading platform, zero commissions, fractional trading, and a scarcity of sports have driven some young investors into the market. These investors have recently received news for investing an honest amount of cash in struggling stocks.


While the US economy is facing one among its deepest recession, the US markets have recently witnessed a V-shaped recovery. Are these 'Robinhood investors' driving the recovery? Experts remain conflicted thereon front.


However, a well-liked narrative is that a flood of latest investors is driving the market's rebound from lows. The trading platform Robinhood said that it saw a historic 3 million new accounts within the half-moon . This alongside markets experiencing their fastest market then moving to recovery gives color to the narrative.


Global brokerages and investment banks have also examined this Robinhood phenomenon intimately .


According to Barclays, there's no clear relationship between aggregate [Robinhood] holdings of S&P500 stocks and therefore the returns of the index. It believes that there's no compelling correlational evidence that Robinhood investors are pushing up stock prices.


However, a report by Societe Generale noted that Robinhood users' total holdings increased in March, exactly when stocks bottomed and began their upwards trend.


CNBC quoted a Goldman Sachs report saying that the businesses fashionable the amateur traders are sharply outperforming hedge funds and mutual funds since the market bottom. The retail investor list is formed upon many of the stocks most suffering from the pandemic like airlines, casinos, and cruise lines, it added.


By: Davinder Sharma


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