Robinhood, the free trading app, has given rise to a slew of new-age investors, who are attracted by the platform’s ease-of-use, its support for cryptocurrency, and access to loads of investment knowledge.
Robinhood reached the top spot on the App Store and managed a $30 billion valuation funding round. It gained around 3 million new users last year. The average age here is barely 30, which means most punters here are novices or recreational.
But if one is eager to learn, some stocks trading on the platform are good long-term investments. Even savvy investors like Larry Fink and Cathie Wood seem to think so.
Currently, Airbnb and Square are popular bets on the platform and could actually be smart long-term investments.
Here’s a little background on the companies to help make the decision to buy-in a little easier.
Larry Fink’s BlackRock added 1.2 million shares of Airbnb in the last quarter, bringing its total to 2.8 million. Considering the state of the travel industry, one wonders why?
Airbnb’s platform connects potential guests with 4 million hosts — both individuals and professional property managers — in over 100,000 cities. The app has enabled many to monetise their spare rooms or generate extra income from playing hosts to travelers across the world.
Airbnb’s unique business model disrupted the industry. In fact, with a market cap of $93 billion, it’s worth more than Hilton, Marriot, and Hyatt combined.
However, the pandemic in 2020 saw its revenues falling 30 percent. But this was still better than the average 55 percent losses suffered by big hotel chains such as Hilton, Hyatt and Marriott.
Moreover, the first quarter of 2021 has seen fortunes of the room-booking app improving. Airbnb reported revenue of $887 million, up 5% from the prior year. Gross bookings value went up 52% to $10.3 billion, implying strong demand in the coming quarters.
Airbnb scores on its wide spectrum of stay options and offers. One can book a villa in Greece, a loft in London, or a small bed in a small house in a village in India. The price and the experience factor is unmatched.
No hotel chain can offer that type of immersive experiences. So it is no wonder that Blackrock is buying up the stock.
Square has attracted the attention of Cathie Wood of Ark Invest. Ark bought 3.9 million shares of Square in the first quarter, pushing its total to 11 million shares. Square is now Ark’s third-largest holding, representing nearly 5% of its portfolio.
Square is an end-to-end payment platform covering everything from payment processing and inventory management to payroll and financing.
Square has built upon its services with the launch of Square Messages this quarter. This service allows sellers to chat directly with buyers, helping them create lasting relationships.
Square’s advantage is that both small and big businesses can use it, though the larger sellers are a little slow on the uptake, but Square is constantly innovating to bring them on board.
Square’s Gross payment volume (GPV) from mid-market merchants jumped 43% this quarter in Q1. Mid-market merchants (i.e. those with annualized sales above $500,000) now represent 30% of Square’s total GPV.
But what pushed the revenue up for the payment app is its Cash Card. Gross profit surged 171% to $495 million, driven by strong consumer engagement on its Cash Card. It has developed a strong loyalty program that helps sellers launch rewards points for buyers. It is a good feature to build strong customer engagement.
Square has managed to perform well during the pandemic too.
It scored on its competitors due to the constant building of its ecosystem and strong integrations of the whole payment process.
Robinhood filed for a confidential IPO in March 2021, no details of the offering are public yet. The platform was in the news recently due to its popularity with traders involved in the GameStop short squeeze. Increased trading activity on its platform brought all activity to a stop. The company was also forced to raise additional capital from investors to meet its capital requirements.