Coinbase pulled in $57 million from retail investors during its trading debut, the 5th-most-popular offering since 2017

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Coinbase is set to directly list on the Nasdaq on Wednesday.

  • Retail investors poured $57 million into Coinbase shares during its first day of trading Wednesday.
  • Coinbase’s debut is the fifth most popular for retail investors in four years, says VandaTrack.
  • Coinbase shares were up during their second session of trade.
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Coinbase‘s trading debut drew in more than $57 million from retail investors, putting the cryptocurrency exchange among the most popular stocks to go public in the last four years, according to figures released Thursday.

Retail investors poured in $57.35 million into Coinbase on Wednesday when its direct listing on Nasdaq went live publicly, according to VandaTrack, which monitors retail investing activity in 9,000 individual stocks and ETFs in the US.

Coinbase accounted for nearly 7% of net purchases made by retail investors on Wednesday, with total purchases of US stocks and ETFs coming in at US$822 million.

Coinbase’s public debut was the fifth largest in terms of retail buying for newly listed shares since 2017, VandaTrack estimated. The largest was for Snap, with the social media company taking in $143 million in its first day of trading in March 2017. More recently, Rocket Companies, which runs personal finance and consumer service brands including Rocket Mortgage, logged $58 million from retail investors when it went public in August.

The collective profile of retail investors has been raised during the coronavirus pandemic in part as people have used stimulus money and time spent indoors during lockdowns working to make money from the stock market. A recent study by Charles Schwab released showed that 15% of all US stock markets investors began investing in 2020.

In the highly anticipated debut, Coinbase’s market value swelled to an intraday high of $112 billion, surpassing those of some of the largest companies in the US.

Coinbase shares during Thursday’s session rose, trading above $334 each. They finished Wednesday’s session at $328.28, below their open opening price of $381.

Read more: BTIG identifies 14 beaten-down stocks poised to dominate the market this earnings season and extend their track record of crushing expectations

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Retail stock traders are 33% less active than last month – and Goldman says the slowdown could continue as the economy reopens

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  • Trading activity among retail investors has dropped by 33% in April from last month, Goldman Sachs said in a note Monday.
  • The reopening of businesses and an increase in COVID-19 vaccinations may have contributed to the slowdown.
  • Stock buying by retail investors is still above pre-pandemic levels.
  • See more stories on Insider’s business page.

Retail trading activity has slowed down by more than a third in April, in part as people focus on getting back out after a year of COVID-19 restrictions and businesses restart as millions of Americans receive vaccinations, according to Goldman Sachs.

There’s been a 33% drop in broader volumes in US cash equity trading, or single-stock trading, this month from March, the investment bank said, citing data from retail brokerage Charles Schwab.

“We believe recently mixed equity performance and accelerating re-opening of the economy amid increased vaccination pace could partially explain the recent slowdown in retail activity,” Goldman Sachs equity analyst Alexander Blostein wrote to clients in a note published Monday.

The slowdown by retail investors reconciles with a decline in off-exchange market share by more than 400 basis points quarter-to-date compared with the same period in the first quarter of the year, “drifting to low 40%’s and closer to historical levels after reaching as high as 50% at various points in [the first quarter],” Blostein said.

Other firms that track activity by retail investors in recent weeks have also noted a slowdown. Investors who have received $1,400 stimulus checks in March as part of the US government’s COVID-19 stimulus efforts may have opted to purchase other goods and services, save the cash or pay down debt.

At the same time, the government has ramped up the availability of coronavirus vaccines to the US population, spurring many businesses to reopen their doors after closing them during the worst of the pandemic.

Still, retail trading remains significantly above pre-pandemic levels and features many structural changes such as zero-commission trading, said Blostein.

“While the degree to which retail will normalize is uncertain, further moderation in retail participation is likely to create meaningful headwinds to both US cash equity and option volumes.”

Retail investing has come into focus following the surge in interest in the stock market during pandemic, as well as volatility in so-called meme stocks that were stoked on social media sites such as Reddit. Video game retailer GameStop and movie-theater chain AMC Entertainment have been among the most popular names among retail investors looking to make a profit by squeezing short-sellers in the stocks.

A study by Schwab released last week showed that 15% of all US stock markets investors began investing in 2020. The median age of new investors is 35 years.

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A Reddit-inspired bar in Tokyo caters to newbie investors where seasoned traders offer hot stock tips – and customers can try drinks like the ‘Margin Call’ and ‘Lehman Shock’

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  • An investing influencer has opened a bar that’s popular for stock-trading tips in Tokyo.
  • Many experienced traders visit, offering investment advice to those looking to grow their money.
  • It offers unique investing-themed drinks like the “Margin Call,” the “Lehman Shock,” and “Abenomics.”
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Tokyo now has a Reddit-inspired bar where seasoned traders provide newbie investors with trading tips, Bloomberg reported.

An investing influencer, who goes by the name Satoshi Uehara on Twitter, opened “Stock Pickers” in early March after a crowd-funding campaign raked in more than $50,000, or about six times the target.

The bar’s PR manager, Riki Yamauchi, told Bloomberg many novice investors visit the bar to meet Uehara and other experienced traders to gain an understanding of investing and stock valuations.

“People’s mentality is changing — you really have to think about how to structure your wealth,” Yamauchi, who is a financial professional himself, said. He said many youngsters have become more open to investing after Japan’s economy saw 30 years of near-stagnation.

Millions of retail investors accounted for a large part of stock-market activity during the pandemic, when people were stuck at home and began exploring easy-to-navigate online trading platforms.

At the bar, there are books on value investing and advice from legendary investor Warren Buffett. A model cannon used to symbolize the central bank’s asset-buying capacity can be found in one part of the bar, where a sign states: “Don’t fight the NIPPON GINKO (the Bank of Japan).”

Customers can also order investing-themed drinks, according to Bloomberg. The “Margin Call” – made with vodka, grenadine, and Campari – is said to have a biting taste meant to stir up bitter feelings traders may experience when summoned with the brokerage demand. The “Lehman Shock” is a punchy drink named after the investment bank at the centre of the global financial crisis. The “Abenomics” – made with cherry blossom syrup and grapefruit juice – is said to be less heavy than investors would hope.

“Stock Pickers” is not just popular among the newbie investors. It’s also had many visits from institutional investors. That may be because of Reddit and GameStop, according to Yamauchi. “People really care about what retail is thinking,” he said.

The bar opened when Tokyo was still in a state of COVID-19 emergency, but is able to function under shortened operating hours.

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Over 50% of US investors think the stock market is rigged against individuals, a Bankrate survey finds

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A woman walks past the New York Stock Exchange (NYSE) at Wall Street on November 16, 2020 in New York City.

  • 56% of investors surveyed by Bankrate say they strongly agree or somewhat agree that the stock market is rigged against individual investors.
  • Meanwhile, 41% of Americans surveyed who don’t have any money invested in the stock market also agreed with the notion.
  • The survey sheds a light on recent retail investor sentiment following the Reddit-driven trading surge in January.
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Over half of US investors think the stock market is rigged against individuals, according to a survey of 2,525 Americans from Bankrate.

In a February study, 56% of investors surveyed and 41% of non-investors either “strongly agreed” or “somewhat agreed” with the statement: “The stock market is rigged against individual investors.”

Overall, 48% of American adults surveyed either somewhat or strongly agreed with the statement. More than 18% strongly agreed with the statement, and roughly 29% somewhat agreed. Meanwhile only 13% disagreed with the statement, with the rest remaining neutral.

The results come after the Reddit-driven market frenzy in January that saw Robinhood halt trading of many “meme stocks” stocks, prompting retail investors to argue they’re at a disadvantage.

The Bankrate survey revealed that more than 39 percent of American adults had no money invested in the stock market either before the pandemic or currently.

Other findings include:

  • 20% of investors said they’re investing more now than before the pandemic, with younger investors adding more than older cohorts.
  • 39% of American adults had no money invested in the stock market before the pandemic or currently.
  • Investors who identified as Reddit users were more than twice as likely to invest more now than less now compared to pre-pandemic.

The Bankrate study was conducted via online interview by YouGov Plc from Feb 24-26 2021. 2,525 adults were surveyed and data was intended to be representative of all US adults.

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Billionaire investor Jeffrey Gundlach warns stocks are hugely overvalued – and amateur traders will worsen the coming crash

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Jeffrey Gundlach.

  • Jeffrey Gundlach warned stocks are overvalued and face a brutal downturn.
  • The billionaire investor predicted the stock market will tumble by far more than 15%.
  • The DoubleLine Capital boss also slammed the latest round of US stimulus.
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Billionaire investor Jeffrey Gundlach sounded the alarm on stocks and predicted a painful crash on DoubleLine’s Total Return Webcast last week.

Suggesting the stock market is “anything other than very overvalued versus history is just to be ignorant of all the metrics of valuation,” the DoubleLine Capital boss said.

Gundlach gave that reply when asked whether he agrees with Michael Burry of “The Big Short” fame that markets are in a “speculative bubble” and will suffer a “dramatic and painful” decline. He voiced a similar view, saying stocks would fall much more than 15% when the downturn comes.

The so-called “bond king” predicted that many retail investors will cash out when equities turn south, exacerbating the inevitable correction. “We’ll have a tremendous unwind of a lot of the money that thinks that the stock market is a one-way thing,” he said.

Gundlach also issued a stark warning about federal spending during the pandemic. “We’re pretty clearly in a speculative bubble regarding debt and government activity,” he said.

The DoubleLine boss deployed a wealth of economic data to make his arguments. For example, he pointed to rising trade and budget deficits, depressed consumer confidence, record readings on the “Buffett indicator” and other market gauges, heady price-earnings ratios, and the disconnect between growth, employment, and the stock market.

Gundlach made several calls during the webcast. He expects year-on-year inflation of over 3% in June or July, the dollar to weaken in the coming months, and gold prices to bounce back.

Moreover, the investor predicted the VIX – an index known as the market’s “fear gauge” because it measures investors’ volatility expectations – will surge past 100 for the first time when the crash comes. Lofty valuations and the “amateur aspect of the market with Robinhood” will fuel volatility, he said.

Gundlach also criticized President Biden’s $1.9 trillion stimulus bill, which was signed into law last week. He called it “shocking” that couples with a household income of $150,000 and three children are set to receive $6,000 in federal support.

Stimulus initiatives are “cooking all of us frogs in a pot,” he said, comparing them to “monetization” programs where governments fund themselves by printing money instead of collecting taxes or borrowing.

“The biggest problem is that we’ve become totally addicted to these stimulus programs,” Gundlach said. He argued that the government is training people to rely on federal support, and could struggle to turn off the tap as a result.

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Robinhood CEO says investing ‘should be as ubiquitous as shopping online’ and should not be viewed as gambling

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Robinhood Markets CEO Vlad Tenev defended the mission of his trading platform, which seeks to “democratize finance for all” amid backlash from lawmakers, regulators, and Wall Street firms blaming the mobile app for luring inexperienced investors and “gamifying” the stock market.

“Investing should be as ubiquitous as shopping online,” Tenev told Bloomberg. “It should just be something that people do.”

The Menlo Park, California-based company has faced scrutiny for its role at the center of the GameStop frenzy in January. This includes complaints that the mobile app used “aggressive” tactics to lure young and inexperienced investors with commission-free trades.

A five-hour congressional hearing in front of the House Financial Services Committee was held on February 18, scrutinizing the role the company played.

“This is what I signed up for,” Tenev said. “Any time you’re causing change in society and kind of upending the status quo, it’s probably not going to be the most comfortable process.”

The 34-year-old founder also rebuffed comments from various experts on the addictive nature of trading apps like Robinhood. The app has attracted over 13 million users since 2013, many of whom are younger retail traders.

“I reject the idea that investing in the US capital markets is gambling,” Tenev said. “We’d be happy to have the conversation, but of course we understand that investing is a serious thing.”

“The facts will come out and it will bear out that Robinhood is a customer-focused company that’s operating with the highest standards of integrity,” Tenev said.

In the February hearing, Tenev maintained that Robinhood has created opportunities for a new generation of investors. The CEO told lawmakers that the assets of his platform’s users have collectively grown by more than $35 billion, a claim challenged by some, including Rep. Jim Himes.

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GameStop stock surges 19% as retail investors pile into meme stocks again

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GameStop shares jumped as much as 19% on Wednesday, as retail investors piled into meme stocks once again.

The video-game retailer’s stock price soared as high as $294 – a 550% increase in the space of 11 trading days. A key catalyst for the rally was the news that activist investor and Chewy cofounder Ryan Cohen will spearhead GameStop’s e-commerce transformation.

Several other stocks that are fan favorites on Reddit’s Wall Street Bets forum posted gains on Wednesday. AMC Entertainment shares rose as much as 15%, Express gained 30%, and Koss jumped 65%.

Despite their recent gains, GameStop shares are still down from their peak this year. They skyrocketed more than 2,500% in January, from about $17 at the start of the year to an intraday high of $483 on January 28.

The GameStop short squeeze in January hammered short-sellers, rattled financial markets, and prompted Congressional hearings to sort through what happened.

The event also sparked criticism from top investors. Warren Buffett’s business partner, Charlie Munger, likened it to people gambling on racehorses. Similarly, “The Big Short” investor and former GameStop shareholder Michael Burry denounced the buying frenzy as “insane” and “dangerous.”

Here’s a chart showing the sharp increases and declines in GameStop’s stock price this year:

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The next stimulus will drive another surge of retail investing in the stock market, Bank of America says

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Robinhood is hugely popular among day traders, putting it at the center of the GameStop frenzy

  • The next round of stimulus aid will drive another surge of retail investing, Bank of America said.
  • BofA data shows the last two spikes in trading app downloads coincided with the receipt of stimulus checks. 
  • A more broad-based stimulus will lead to a higher uptick of retail-investing, added BofA.
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Retail investors have poured into the stock market in the last year, lured by comission-free trading, work from home conditions, stimulus checks, and high savings rates. Now, Bank of America says that it is expecting the next round of federal stimulus aid to drive another surge in retail investing.

“We expect another uptick in retail activity with another round of stimulus, though the level will likely depend on the type of stimulus (broad based or targeted), the market backdrop at the time, as well as any potential regulatory changes discussed over the coming weeks,” a team of BofA analysts said in a recent note. 

The firm found that the last two spikes in trading app downloads coincided with the receipt of stimulus checks. However, in both cases, there were extreme market moves (April 2020) and individual stock moves (January 2021) that helped draw investors.

If the next round of stimulus is broad based, BofA expects a higher level of retail activity, particularly as unemployment improves and many Americans are in better financial positions. President Joe Biden’s proposed $1.9 trillion stimulus plan includes $1,400 direct payments for individuals making up to $75,000 a year. 

Read more: Raymond James says buy these 12 ‘center of the storm’ stocks that are set to rebound as the economy reopens – including 6 that can outperform the S&P 500 in the coming months

While BofA expects retail engagement to moderate throughout 2021 following the stimulus as people spend more time and money away from home, the bank still expects structurally higher levels of retail activity versus 2019 because of zero commissions, new entrants, and advances in technology. 

In addition to a stimulus-boost, Bank of America’s data shows that the recent surge in retail trading has been led by young investors and social media.

Throughout 2020 and January 2021, brokerage firms E-Trade and TD Ameritrade saw a rising percentage of users aged 18-34, BofA said.

“It’s not just retail investors that may increasingly be a force in markets, its young retail investors,” BofA noted. “And while traditional news outlets did see a usage boost from the January surge in certain stocks, the boost was far bigger for Reddit, which tells you something about how these younger investors are obtaining views and information.” 

Bank of America found that Robinhood daily average users reached 8 million, up from an average of 4.5 million, at the height of the GameStop market-mania in late January. At the same time, conversations on the WallStreetBets Reddit forum climbed dramatically.

While Robinhood usage has come down from its January highs, it still remains elevated relative to before the GameStop frenzy, indicating that retail activity is here to stay, BofA added.

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Read more: Biden’s ESG push is a huge opportunity for asset managers. Firms like BlackRock and Fidelity are making hires, boosting tech tools, and launching new products to capture it.

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AMC rips 8% higher as Reddit traders stick to their favorite meme stocks

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  • AMC gained as much as 8% on Tuesday as Reddit traders piled into the theater chain’s shares.
  • While the day-trading phenomenon died out earlier this month, Tuesday’s climb suggests the crowd still holds some sway in the market.
  • Reopenings and vaccination could lift AMC from its COVID-19 slump, one Reddit user said.
  • Watch AMC trade live here.

AMC Entertainment surged as much as 8% on Tuesday as retail investors banding together in online forums returned to the struggling theater chain.

The world’s biggest movie-theater company saw its stock price skyrocket in late January as traders in Reddit groups including r/wallstreetbets piled into highly shorted stocks. Shares soared as high as $20.36 on January 27 before plunging back to earth as the day-trader phenomenon fizzled out.

Tuesday’s price action suggests the crowd of casual investors is still somewhat in it. The gains placed shares at their highest in about a week. Posts on Wall Street Bets hailed AMC as a top recovery play and praised the company’s recent stock sales as a key lifeline. Vaccinations and economic reopening could revive AMC from its virus-induced downturn, Reddit user u/ImFedUpWithItAll said in a post detailing his bullish thesis.

“I’m not Buffett so I’m not buying for life. I’m in this for the rally to normalcy,” they added.

AMC was the most heavily traded company on the New York Stock Exchange before the market opened. Other stocks featured on Wall Street Bets fared worse. Investors looking to lift Palantir saw shares tumble in early trading. GameStop – the group’s favorite stock during the January rally – rose slightly.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

The theater chain was among the few companies able to convert extraordinary retail-trader demand into a stronger balance sheet. The company raised more than $300 million last month by selling shares during the Reddit-trader rally. When coupled with a $411 million credit line, the fundraising efforts took bankruptcy talks “completely off the table,” CEO Adam Aron said in a statement.

To be sure, locations in key markets including California and New York remain closed as COVID-19 cases rise across the country. The halt to regular operations endangered the company earlier in the pandemic and forced warnings of extinguished cash reserves.

Daily COVID-19 case counts have since fallen, prompting investors to shift back into so-called reopening sectors including travel, leisure, and entertainment.

AMC closed at $5.59 on Friday, up roughly 158% year-to-date. The company has three “buy” ratings, 10 “hold” ratings, and four “sell” ratings from analysts, with a median price target of $3.99.

Read more: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold – here’s why the bank says it could end up ‘worthless’

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