Billionaire investor Mike Novogratz compares crypto zealots to anti-vaxxers – and says GameStop fans show the same conviction

GettyImages 1281542990
Mike Novogratz.

  • Mike Novogratz compared crypto zealots to anti-vaxxers, in terms of their stubborn beliefs.
  • The Galaxy Digital boss said GameStop’s fans show a similar level of passion and commitment.
  • Novogratz disclosed that he shorts viral assets when they explode in popularity.
  • See more stories on Insider’s business page.

Bitcoin bull Mike Novogratz compared some cryptocurrency fans to anti-vaxxers in terms of their conviction, and noted GameStop’s followers display the same kind of blind devotion.

The billionaire investor and Galaxy Digital CEO spoke at the Barclays Financial Services Conference this week. He remarked that if he questioned cardano’s roughly $80 billion market capitalization on Twitter, he would be inundated with thousands of attacks by the coin’s supporters.

“It’s like telling a Manchester United fan that Man U sucks, or going to an Eagles game with the Giants’ jersey on,” Novogratz said, according to a transcript on Sentieo, a financial-research site.

“These ecosystems are unbelievably rabid,” he continued. “They’re passionate. It’s like an anti-vaxxer – you can’t tell an anti-vaxxer they’re wrong, right? They have personalized this stuff.”

Viral assets such as cardano, dogecoin, or GameStop and AMC shares don’t make sense to rational investors given their limited functions or heady valuations, Novogratz said. Yet online communities have sprung up around them, and diehard members have made owning and touting those assets a key part of their identities, he continued.

“GameStop is a crypto at this point, there’s no link to its profitability,” Novogratz said.

The Galaxy Digital boss revealed that he seeks to profit from the breathless, but often short-lived, excitement around meme stocks and altcoins.

“I love shorting, because that’s how I get longer the stuff I like,” he said. “The moment that community gets really big, you’re going to short it.”

However, Novogratz noted that he cashes out his profits once there’s a sell-off, as the support bases for viral assets have proven to be far more resilient than he expected.

Novogratz also trumpeted the crypto industry’s prospects at the conference. The sector is only now taking off, he said, and failing to invest in the space would be like missing the internet in the early 2000s.

Read the original article on Business Insider

Bitcoin bull Mike Novogratz compares crypto zealots to anti-vaxxers – and says GameStop fans show the same conviction

GettyImages 1281542990
Mike Novogratz.

  • Mike Novogratz compared crypto zealots to anti-vaxxers, in terms of their stubborn beliefs.
  • The Galaxy Digital boss said GameStop’s fans show a similar level of passion and commitment.
  • Novogratz disclosed that he shorts viral assets when they explode in popularity.
  • See more stories on Insider’s business page.

Bitcoin bull Mike Novogratz compared some cryptocurrency fans to anti-vaxxers in terms of their conviction, and noted GameStop’s followers display the same kind of blind devotion.

The billionaire investor and Galaxy Digital CEO spoke at the Barclays Financial Services Conference this week. He remarked that if he questioned cardano’s roughly $80 billion market capitalization on Twitter, he would be inundated with thousands of attacks by the coin’s supporters.

“It’s like telling a Manchester United fan that Man U sucks, or going to an Eagles game with the Giants’ jersey on,” Novogratz said, according to a transcript on Sentieo, a financial-research site.

“These ecosystems are unbelievably rabid,” he continued. “They’re passionate. It’s like an anti-vaxxer – you can’t tell an anti-vaxxer they’re wrong, right? They have personalized this stuff.”

Viral assets such as cardano, dogecoin, or GameStop and AMC shares don’t make sense to rational investors given their limited functions or heady valuations, Novogratz said. Yet online communities have sprung up around them, and diehard members have made owning and touting those assets a key part of their identities, he continued.

“GameStop is a crypto at this point, there’s no link to its profitability,” Novogratz said.

The Galaxy Digital boss revealed that he seeks to profit from the breathless, but often short-lived, excitement around meme stocks and altcoins.

“I love shorting, because that’s how I get longer the stuff I like,” he said. “The moment that community gets really big, you’re going to short it.”

However, Novogratz noted that he cashes out his profits once there’s a sell-off, as the support bases for viral assets have proven to be far more resilient than he expected.

Novogratz also trumpeted the crypto industry’s prospects at the conference. The sector is only now taking off, he said, and failing to invest in the space would be like missing the internet in the early 2000s.

Read the original article on Business Insider

The CEO of a company about to go public via SPAC is reaching out directly to Reddit as blank-check firms try new ways to keep investors interested

Reddit screen on laptop with smartphone reddit logo
  • The CEO of a food technology company is looking to answer questions from retail investors before his firm goes public via a SPAC.
  • Matt Crisp of Benson Hill announced on Reddit that his company will be answering retail questions before listing publicly.
  • The move comes as many blank check firms struggle following their IPOs or post-SPAC mergers.
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Trying to get in touch with retail investors before your company goes public? Head to Reddit’s r/SPACs channel and ask them questions directly.

That’s what Matt Crisp, CEO of Benson Hill did on Thursday. His food technology company will be going public in New York via a SPAC later this month, and he wants input from retail investors during the process.

“We want our food system to be driven by consumers for consumers, with a greater focus on transparency and inclusion. That’s why I wanted to reach out to this community directly,” Crisp said in a Reddit post.

Crisp announced that Benson Hill will be partnering with Robinhood-owned Say Technologies to respond to retail investor questions in a forum on September 17th ahead of the company’s formal listing.

“Say has done a great job partnering with some interesting companies on quarterly earnings calls, and we wanted to extend the concept to address questions during the SPAC process, too, he said. “We recognize the attention paid to SPACs these days and want to leverage the platform in a positive way – which means more transparency and direct communications with a broad range of investors,” said Crisp.

Benson Hill’s effort to go the extra mile to connect with retail investors before its SPAC listing comes as blank-check deals struggle to gain traction. 75% of the 137 deals that closed by mid-February have fallen before their initial listing price, according to data from the Wall Street Journal.

Meanwhile, SPAC shareholders’ discontent with companies is evident in the growing number of redemptions. On average, SPACs that closed in August saw 58% of shares get redeemed, according to SPAC Research data cited by DealBook.

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Nearly half of young investors pushed their stimulus cash into stocks and cryptocurrency, study says

investing app
  • 49% of 18-34 year-old investors have invested their stimulus money, a CNBC/Momentive study found.
  • More than 25% of the total respondents said they starting investing in the past 18 months.
  • 11% of people in the US invest in crypto, with the most interested in long-term growth potential.
  • See more stories on Insider’s business page.

Close to a majority of young investors who received money from the US government to withstand the COVID-19 pandemic used some of those funds to buy stocks and cryptocurrencies, according to a CNBC/Momentive survey.

49% of investors 18-34 years-old turned to stocks and digital assets in an effort to maximize their slice of the billions of dollars in stimulus money sent to most Americans by the Biden and Trump administrations after the virus began to sweep through the country in early 2020.

15% of young investors put money into individual stocks and 11% purchased cryptocurrency, according to the survey published Tuesday. Also, 9% invested in mutual funds and 8% purchased exchange-traded funds. Momentive surveyed 5,523 adults from August 4-9, and of those, 45% are investors.

More than 25% of total survey respondents said they began investing within the last 18 months, and 73% started in 2019 or earlier.

US stocks so far this year have climbed to record highs, aided by a growing number of individuals who have used so-called ‘stimmy’ cash to buy into dips or pullbacks in the market as prices become less expensive. Meanwhile, the cryptocurrency market this year has swelled to more than $2 trillion in valuation, fronted by gains for bitcoin, ether and other digital currencies.

The survey found that one in 10 people in the US invest in cryptocurrencies and 60% do so because of the potential for long-term growth.

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Retail investors got a rare chance to be heard on Robinhood’s earnings call – and they wanted answers on everything from PFOF regulation to how to get branded merch

Vlad Tenev, CEO and Co-Founder, Robinhood in his office on July 15, 2021 in Menlo Park, California.
Vlad Tenev, CEO and co-founder, Robinhood.

  • Retail investors had a rare chance to speak up during Robinhood’s second quarter earnings call Wednesday.
  • Shareholders asked executives about payment for order flow, Robinhood’s crypto wallet plans, and whether the app will offer tax-advantaged accounts.
  • One of the top shareholder questions was whether Robinhood will launch branded merchandise.
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In line with its stated mission to “democratize finance for all,” Robinhood allowed retail investors to speak up and ask questions during the brokerage app’s second quarter earnings call on Wednesday.

While corporate earnings calls for public companies are open to any who wish to dial in, the Q&A portions are mostly limited to queries from institutional investors and analysts. Robinhood ahead of its earnings report received over 1,300 questions from shareholders and answered questions that had the top votes.

One of the top voted questions?

“Can we get a Robinhood hat and hoodie jacket?”

The question speaks to the enthusiasm many retail investors have towards the brand. But alongside questions about Robinhood swag were more serious enquiries, including what Robinhood would do if payment for order flow was regulated.

“Payment for order flow is regulated already,” replied CFO Jason Warnick. “It’s been primarily focused on disclosures. And we do provide all the required disclosures and we do our best to explain how we make money and what payment for order flow is.

81% of Robinhood’s revenue came from payment for order flow in the first quarter of 2021. Analysts have raised concerns that Robinhood’s business may be more vulnerable to further payment for order flow regulation than its competitors, as other brokerages don’t derive as much revenue from the practice.

But Warnick said Robinhood is aiming to be the one app that customers go to “for all things money,” which will lead to diversification in the company’s revenue streams over time.

Another retail investor asked if Robinhood plans to create a cryptocurrency wallet. CEO Vlad Tenev said the option is a “key priority” for Robinhood, but did not offer a definitive timeline on when customers would see a wallet.

He emphasized that Robinhood is working on making the crypto arm as safe as possible from a security and operations standpoint. Robinhood’s surging revenue in the second quarter came largely from cryptocurrency trading.

The Menlo Park, California-based company is also looking at offering customers access to tax advantaged accounts like Roth IRAs and IRAs “in the future,” said Tenev, answering another shareholder’s question. But he added that Robinhood does not plan to announce new products during earnings releases.

As to the hoodie question, Warnick didn’t make any promises.

“We’d love to find a way to get that in the hands of our customers,” he said. “So I can’t make a commitment right now. But I will say that we’ll go look at this. I think it’s a great idea to get our branded merchandise in the hands of our community.”

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Moderna was the most-bought stock for retail traders in the week leading up to its 16% single-day plunge

Moderna vaccine
Moderna has soared over the last year on the back of its coronavirus vaccine.

  • Moderna was retail investors’ most-bought stock in the five days to Tuesday – before the company plunged 16% on Wednesday.
  • Retail investors also snapped up vaccine-maker Pfizer, according to data company VandaTrack.
  • But Wall Street is conflicted on the sector after its stellar rally, with BofA calling Moderna’s price “ridiculous.”
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Moderna was the most-bought stock among retail investors in the five days to Tuesday – before plunging 16% on Wednesday as Wall Street balked at the vaccine company’s sky-high share price.

Vaccine-makers were a favorite pick for retail investors in the five trading days from August 4 to August 10, figures from data company VandaTrack on Wednesday showed.

Moderna, an mRNA developer that produced a 95% pandemic-ending vaccine in under one year, was top of the bunch with $159 million of net purchases. Investors were likely drawn in by the stock’s 17% jump to a record high on Monday, boosted by the potential for third booster shots and other news that day suggesting strong demand for Moderna’s COVID-19 vaccine.

Pfizer was fifth on VandaTrack’s list, with $107 million of net purchases.

But, as also seen in Chinese stocks, institutional investors appear to have become more wary about the vaccine space than retail traders. Bank of America published a note on Tuesday slamming Moderna’s stock price, saying it had gone from “unreasonable to ridiculous.” It has climbed more than 460% over the past year.

The bearish note and potential regulatory issues helped send Moderna and German vaccine-maker BioNTech tumbling on Wednesday, with the latter dropping 14%. Pfizer fell 4%.

Moderna was down 6.3% for the week at Wednesday’s close, while BioNTech was down 12%.

Read more: 11 biotechs primed to make billion-dollar buys and usurp Big Pharma

BofA’s Geoff Meacham said investors were being wildly optimistic about Moderna’s future performance. The bank thinks the stock is worth $115, 70% below Wednesday’s closing price of $385.33.

VandaTrack’s analysts said outsized retail flows were likely largely responsible for the rally in vaccine makers over the last few weeks.

But institutional investors appear more conflicted after the companies’ astounding gains. Wall Street analysts’ average 12-month price target for Moderna is $277.07, 28% below the stock’s closing price on Wednesday, and it has more “hold” than “buy” ratings.

At the same time, analysts’ average target for BioNTech is $267.10, undershooting Wednesday’s closing price of $359.19 by 25%, according to Bloomberg data.

Despite Moderna and BioNTech’s plunge, VandaTrack said many retail traders are still on course to make gains through their purchases of call options – contracts that let investors buy a stock at a certain price on or before a set date.

Moderna rose 2.6% in early trading Thursday, while BioNTech climbed 4.6%.

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Coinbase’s CFO says the company is looking to focus more on institutional clients – and lays out what services those firms generally need

coinbase direct listing

Coinbase, the world’s largest cryptocurrency exchange, is looking to focus more on institutional clients, CFO Alesia Haas said on Wednesday.

“The way that we look at it is where the money is in the world,” Haas told CNBC. “A lot of that money sits in institutional hands, whether that is in pensions or asset managers. So I think we’ll shift into more institutional money as we go forward.”

Haas also laid out what institutional firms generally look for when seeking their services.

The first step is usually for cryptocurrency custody, a service that Coinbase provides institutional firms so they can have a safe and secure way to store their digital assets, said Haas.

“They really appreciate our history of investing in security that we have not had a loss due to cyberattacks on our platforms since our inception,” she told CNBC.

From there, Haas said it moves into trading, data services, and borrow-lend products, in that order.

“We’re really building deep roots with a lot of our institutional clients across their investing needs in the crypto economy,” she added.

Among its roster of clients are Elon Musk’s SpaceX and Tesla, as well as PNC Bank, Third Point, and WisdomTree, CEO Brian Armstrong revealed on Tuesday during the earnings call. Around 10% of the top 100 largest hedge funds by AUM have also onboarded the company’s institutional product, he added.

The company on Tuesday posted second-quarter earnings that crushed analyst expectations, boosted by a volatility-spurred jump in trading volumes. The chart below shows pronounced quarter-over-quarter growth in both retail and institutional activity.

Coinbase key metrics: institutional vs retail traders

Retail investors, which pay more fees compared to institutional traders, comprised almost 95% of Coinbase’s transaction revenue in the quarter.

Coinbase’s stock rose to as much as 9% to $294 on Wednesday.

Read more: A key bitcoin lightning network developer shares how he makes $4,500 a month just in fees from running a node. He and 3 other crypto experts lay out how to run profitable nodes.

Read the original article on Business Insider

Retail investors’ strong ‘buy-the-dip’ impulse will help keep stocks buoyant in 2021, says TD Ameritrade’s JJ Kinahan

Happy Stock Market Investor
Retail investing has boomed in 2020 and 2021.

  • Retail investors’ strong buy-the-dip impulse should help support stocks over the coming months, JJ Kinahan said.
  • The TD Ameritrade strategist said uncertainty about inflation and the Fed should bring volatility, however.
  • Retail investors have been snapping up recent dips largely through buying ETFs, analysts say.
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Retail investors have been eagerly buying the dip and it’s supporting US stocks despite uncertainty about the economy and monetary policy, TD Ameritrade’s top strategist JJ Kinahan has said.

“Anytime you see stocks move down 3% or less, you’re seeing people come out really quickly to buy things,” he told Insider this week.

Kinahan said he thinks the buy-the-dip impulse is set to continue. And he said he doubts there will be big drops in US stocks this year.

But he said uncertainty around inflation and when the Federal Reserve will cut back on its support for the economy will increase volatility in US stocks in the coming months.

Kinahan likened investors’ persistent buying to American football tactics. “If you’re running a play that works, you don’t stop running it until the other team stops it. Right now, buy the dip, nobody’s stopped it.”

TD Ameritrade is one of the biggest electronic brokers, with more than $1 trillion in client accounts.

The S&P 500, the US benchmark stock index, has consistently hit record highs despite periodic sell-offs. For example, stocks fell around 2.5% over two days in the middle of July, only to rise 3.7% over the next five days.

On one of the days stocks slid in the middle of July, retail investors bought a record $2.18 billion of equities, according to data company VandaTrack.

Amateur traders snapped up exchange-traded funds like State Street’s SPY, which tracks the S&P 500, or Invesco’s QQQ, which tracks the Nasdaq 100.

JPMorgan said in a note at the end of July retail investors had also bought the dip in Chinese stocks, which have tumbled after a crackdown on big companies by Beijing.

Nikolaos Panigirtzoglou, a JPMorgan market strategist, said retail investors had also been drawn to ETFs as a way to gain exposure to cheaper Chinese stocks.

However, Viraj Patel, a strategist at Vanda, said retail investing may now slow due to US unemployment benefits lapsing and the fact that Americans have the chance to go out and spend on other things as the economy reopens.

Kinahan said the reopening is likely to boost the economy and so support US stocks over the coming months.

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40% of retail investors think stocks are in a bubble but amateurs keep buying anyway, survey shows

A person using a mobile phone app to invest in stocks.
Retail trading boomed in 2020 during the coronavirus pandemic.

  • 40% of retail investors think stocks are in a bubble after a breakneck rally, according to a new survey.
  • But trading app eToro found that amateur investors remain keen on stocks and think a crash is unlikely.
  • eToro’s survey of 6,000 investors found that their biggest worry is inflation, which has soared in the US.
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Two in five retail investors think global stock markets are in bubble territory, but think a crash is unlikely and appear to be happy to keep buying equities, according to a new survey.

Retail investors believe inflation is the biggest threat to their portfolios, a survey published by trading app eToro found this week.

Polling firm Opinium carried out the survey for eToro and spoke to 6,000 retail investors across 12 countries, including the UK and US, who did not have to be eToro users. It gives a sense of how amateur investors view markets as economies recover from the pandemic.

Although 40% of retail investors said equity markets are in a bubble, 15% said they are fairly valued or undervalued. Another 45% said they neither agreed nor disagreed that they were overvalued, suggesting some uncertainty about the future path of securities. A bubble is typically seen as a moment when stock prices rise rapidly and are higher than justified by fundamental factors such as the health of the economy.

A considerably lower proportion of retail investors think stocks are about to crash than think they are in a bubble, however, with 27% predicting a sharp drop before the end of the year.

Read more: The CEO of the investment-research firm Fintel shares 3 market sectors where insiders are buying and details how his tool can help retail investors identify opportunities

Stocks have soared since the pandemic-induced crash of March 2020, especially in the US. The benchmark S&P 500 has risen more than 90% since its March 2020 low, and US equities are regularly hitting record highs, even as the global pandemic continues.

“It’s worth remembering that while valuations are high, equities are currently cheap compared to bonds,” said Ben Laidler, global markets strategist at eToro.

“The fact that just one in four investors believe that another correction is due before the end of the year suggests that many of them are willing to carry on paying current valuations – for now, at least.”

Just shy of 40% of retail investors believe rising inflation is the biggest threat to their portfolio, eToro’s survey found. But that number rises to 51% in the US, where year-on-year inflation jumped to a 13-year high in June.

eToro found that traditional inflation hedges such as real estate were popular portfolio picks, while a large number of investors were keen on gold.

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The average Brit plans to invest almost 20% more each month after the pandemic, extending the retail trading boom, survey finds

Above angle view of a young man using a trading app.
In addition to executing orders, brokers also provide a range of educational resources and investing advice.

  • The average Brit plans to spend 19% more each month on investing post-pandemic, a Barclays Smart Investor survey says.
  • Half of those surveyed said they will cut back on other spending to fuel their lockdown investing habits.
  • On Monday, trading app Robinhood said it had recorded lower trading levels between March and June.
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The average UK investor plans to increase their investments by 19% each month as COVID-19 restrictions in the country come to an end, extending the retail trading boom that originated during the pandemic, a Barclays Smart Investor survey found.

Younger people are set to increase their investments by an even higher number. The survey, released on Wednesday, found Gen Z investors, many of whom got hooked on investing through the rise of ‘finfluencers’ and financial social media content during the pandemic, are planning to spend an additional 36% a month on investments post-pandemic.

Across all age groups, only 6% of the roughly 2,000 people surveyed, said they planned to cut how much they invest each month. They cited the return of “normality” and the increased spending on activities such as holidays, meals out and weekend trips.

In contrast, around 50% said they would spend less on such activities to support their investing habits.

“The prediction that many will continue, or increase, the amount they invest going forward is likely driven by a rise in lockdown savings, with the ONS reporting that UK household savings are nearing an all-time high.” Clare Francis, director of Barclays Smart Investor said.

76% of those surveyed said they would maintain their investing routine and as few as 4% of those who began investing during the pandemic said they would stop once restrictions in the UK were lifted.

“Today’s findings show just how much the pandemic has changed our approach to saving and investing. As new investors flocked to the stock market last year, it was easy to assume that it was just a lockdown hobby, and that many would go back to their old spending habits when the world re-opened.” Francis said.

Retail trading apps and platforms like Robinhood and eToro, which allow individuals to invest in stocks and digital assets like crypto currencies via their phones or laptops, saw a surge in popularity throughout the pandemic.

Robinhood, which makes its stock-market debut this week, however noted a slowdown of activity on its platform in the second quarter of this year, which was when lockdown restrictions in many countries eased. In its updated prospectus published on Monday, the company said it expected revenue to drop in the three months to September 30 because of the decline in trading activity.

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