Robinhood allows people to buy a minimum of 1 Dogecoin instead of 10 after the meme currency’s gains jumped more than 8,700%

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Robinhood said on Tuesday that it would lower its minimum Dogecoin order size to one coin from 10 coins as the meme-based asset’s popularity rises rapidly.

Investors can also place smaller orders of bitcoin and ether, the company said in an update.

“Much happy! Very day! We’ve lowered the minimum order size from 10 $DOGE to 1 $DOGE. You can now build up your doge empire one coin at a time,” Robinhood said in a tweet. “We’ve also lowered the minimum order size for $BTC (0.000001) and $ETH (0.0001) so it’s easier for anybody to invest in crypto.”

Bitcoin’s previous minimum order on the brokerage was 0.0001, while ether’s old minimum was 0.001.

The trading app describes Dogecoin as a “playful take” on cryptocurrencies. “It’s typically used in online communities to ‘tip’ users for content that’s particularly witty or useful. It’s also become a popular cryptocurrency for donating to charities,” Robinhood says of the meme currency.

The digital asset recently hit a peak of $0.41, taking its year-to-date gains to more than 8,700%. But it was trading 21% lower, at $0.30, on Wednesday.

After Dogecoin hit its all-time high, Robinhood experienced a major trading outage that made it impossible for investors to join the rally. That instance mirrored GameStop’s rise in January, when traders were unable to get in on its booming stock as demand skyrocketed.

“Robinhood is a repeat offender here,” said Richard Smith, CEO of the Foundation for the Study of Cycles. “They are trying to be all things to all people. They are like Uber in the early days where their attitude is, ‘Who cares if we break a few things as long as we keep growing engagement.'”

Smith added: “Breaking a few things in the taxi business is one thing. Breaking a few things in the highly regulated retail financial services industry is something else.”

Robinhood said that the interruptions to trading were unacceptable but that heightened interest in crypto could continue to cause service interruptions.

Dogecoin was created as a joke in 2013, based on a meme.

“Whilst it has some limited practicality as a way of micro-tipping posters on internet forums, its rise has probably very much due to personal amusement reasons in the internet meme culture, recently spurred on by a playful Elon Musk on Twitter,” said Alex Joshi, a behavioral-finance specialist at Barclays Private Bank.

Joshi said that when the price of an asset rises so spectacularly in a short period, investors get lured in with the prospect of getting rich quick. “When you add in rapidly growing numbers of people buying because they see everyone else buying and making extraordinary returns, speculative herding behaviour really takes off, leading to vast numbers entering the market at extremely high price levels,” he said.

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Many Americans are turning to Reddit for stock tips after Wall Street Bets captivated markets during the GameStop saga

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Reddit logo.

Among the many aftereffects of the GameStop saga earlier this year is an increased interest in Reddit as a source of stock picking advice and investing tips, a recent survey shows.

A survey by Travis Credit Union conducted between February 15 to March 2 among 2,052 Americans revealed that 70% who said they invest look to Reddit for stock tips.

“Today, there’s a lot of positive energy around the stock market as a new generation gets involved through new technology,” said Andy Kerns, Creative Director at Digital Third Coast, which managed the survey for Travis Credit Union.

As for their favorite trading platform, 39% said it was Robinhood, followed by E-Trade at 19%, WeBull at 12%, and Fidelity at 10%.

A majority said they check their accounts daily, while 32% check theirs weekly.

Among all the respondents, 1,275, or 62%, said they have invested only recently. Most said they used what they called “extra spending money,” though one in four surveyed said they invested less than $500.

The rapid rise of retail investors has been a powerful force in the stock market, enabled by a range of factors including commission-free trading, distribution of government stimulus checks, and heightened pandemic boredom as many people continue to work from home.

While more than 57% who were surveyed think the boom in retail trading was “great,” around 10% found it “problematic.”

The retail investing trend hit a fever pitch in January, when an army of retail traders coordinating on Reddit’s Wall Street Bets forum sparred with short-focused hedge funds and pushed their favorite stocks higher.

Read more: Buy these 15 stocks that are set to surge as companies invest their near-record amounts of cash on massive infrastructure projects and technologies, Jefferies says

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Robinhood plans to forge ahead with its planned IPO this year despite GameStop controversy, report says

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Co-founder of Robinhood, Vladimir Tenev.

Robinhood’s controversial decision to limit trading in a handful of volatile stocks isn’t derailing its plans to go public later this year, according to a report from Bloomberg, citing people close to the company.

Robinhood has seen a surge in business over the past year as a new generation of investors flocked to the stock market amid a global pandemic that shut down professional sports leagues for months on end. 

The company had more than 13 million users at the end of 2020.

The firm, founded in 2013, is keeping its options open in terms of how it goes public. According to the report, Robinhood is exploring a traditional road show IPO, a direct listing, or a merger with a SPAC. 

The company had been planning to hold an IPO around May, Bloomberg said. 

But over the past week, the firm has received a cash infusion of more than $3 billion as it grappled with meeting deposit requirements amid an epic short-squeeze rally in shares of GameStop and AMC.

Read more: GOLDMAN SACHS: Buy these 35 stocks that are unruffled by GameStop mania and set to rally as the economic recovery gains speed.

The short-squeeze was sparked by traders who frequent Reddit’s WallStreetBets, and many of Robinhood’s users took part in the squeeze by buying shares of the impacted stocks. Robinhood ultimately restricted buying in shares of GameStop and others so it could meet its deposit requirements, the company said. 

The move angered its customers, its employees, and politicians on both sides of the aisle, as the GameStop short-squeeze has been viewed as a David vs. Goliath moment in which everyday retail investors took down Wall Street hedge funds.

Melvin Capital and Maplelane Capital, two hedge funds that were short shares of GameStop, suffered losses of 53% and 47% in the month of January, respectively. 

Robinhood was valued at about $11 billion in a 2020 fundraising round, but the IPO valuation would likely be higher based on last week’s capital raise.

Ribbit Capital led the latest capital raise with a $2.4 billion convertible note that will convert into equity at a $30 billion valuation, or a 30% discount to an eventual valuation in a public listing, whichever is lower, Bloomberg reported, citing people with knowledge of the terms.

Going public will give Robinhood flexibility in terms of securing future financing that could be used to increase its cash buffer needed to appease regulators, as well as fund growth initiatives.

Read more: Buy these 26 heavily shorted stocks as retail traders trigger wild rallies in Wall Street’s least liked names, Wells Fargo says

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