Robinhood growth is floating the stock market despite pandemic

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PCHF Bot
Jan 10, 2015
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pchelpforum.net
Stock trading app Robinhood has revealed recently surpassed the 13 million active users mark.

Much of that growth, rising from 10 million at the start of 2020, has been fueled by the coronavirus pandemic as millennials have increasingly seen opportunity in the beaten-down stock market.

This growth has been anything but smooth, as Robinhood’s trading app crashed three times in a single week as the market experienced a free fall in early March. But the service has been stable since then and the turbulence does not seem to have scared retail traders away from the commission-free broker.

Fueling a risky bull market


Robinhood’s overwhelming popularity has coincided with and may be driving a significant increase in investing risk.

The most popular stocks trading on Robinhood as of early June include Hertz, which filed for bankruptcy in late May, American Airlines, which has cut its domestic summer schedule by 55%, and Carnival, which operates a cruise line that is shuttered for the foreseeable future.

Buying these companies in the midst of the pandemic flies in the face of traditional market wisdom. Traders on Robinhood are buying stocks that institutional and professional investors have largely abandoned in recent months.

In fact, many experts are now sounding the alarm that stocks are heavily overbought. According to a Citigroup model that measures market sentiment, the stock market is at the most euphoric level seen since just before the dot-com crash in 2002.

The bank’s analysts noted that retail traders, and specifically traders on Robinhood, “are ignoring joblessness, trade friction, social unrest, and risks that loom including possible Covid-19 reinfections, the end of bonus supplemental unemployment checks and the upcoming elections."

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