Robinhood traders & TESLA speculation

A funny article on Yahoo Finance which shows how crazy these milenial traders are.

Last Monday when the stock reached 1800$, the stock was been bought by retail speculators like there is no tomorrow.

Almost 40,000 Robinhood accounts added shares of the automaker during a single four-hour span on Monday, according to website Robintrack.net, which compiles data on the investing platform that’s much beloved by day trading millennials.

Who are those Robinhood traders? 

The name Robinhood traders comes from speculators using the Robinhood platform to trade equities, cryptos, ETFs, etc.

Robinhood is a fintech startup; it is not very clear how they make money and some of its methods are controversial. I dont care about that, they do what everyone else does these days... Disrupting something (traditional brokers?)...  

Now back to traders; during the lockdown people were staying home and it seems they did look for get rich quick tricks in the stock market; Google helps with that no problem, so lots of them discovered the Robinhood platform. 3 million accounts have been opened on that platform in the first months of this year.

Amid challenging times and market volatility, we’re humbled that people are turning to Robinhood to participate in the markets and build their financial future. We added more than three million funded accounts so far this year, and we’re grateful for the opportunity to serve each customer.

That's very good for Robinhood platform and for some highly speculative stocks like our darling TESLA stock.

As you alreay know, US government sent checks to americans during the lockdown. It looks like a big chunk of those money, especially from people not in the need, were spent on buying stocks. That can be seen in this table (CNBC article)

So this is another ingredient which probably did help with the TESLA stock stupid rise.

And lately, it seems that casino and sport gamblers did try their hand in the stock market because of casinos and sport events being closed and cancelled.

Ok, back to Robinhood traders; these people have no understanding of the markets, how they work, what's the value of a stock, etc. That's ok because these days those metrics don't seem to matter. These people basically trade... hype.

You probably know that some known brands went broke during the COVID crisis; one such company is Hertz. The Robinhood traders did start speculating in Hertz stock following the news as you can see on Robintrack (a website which tracks Robinhood positions).

 While that does not make much sense, there you have it as shown by the green line: the number of Robinhood traders holding Hertz stock.

The poor understanding of some complicated products by these speculators can have dire consequences sometimes, like for this Robinhood trader who did commit suicide.

Like so many others, Kearns took up stock investing during the pandemic, signing up with Millennial-focused brokerage firm Robinhood, which offers commission-free trading, a fun and easy-to-use mobile app and even awards new customers free shares of stock. During the first quarter of 2020, Robinhood added a record 3 million new accounts to its platform. As the Covid-19 stock market swung wildly, Kearns had begun experimenting, trading options. His final note, filled with anger toward Robinhood, says that he had “no clue” what he was doing. 

In fact, a screenshot from Kearns’ mobile phone reveals that while his account had a negative $730,165 cash balance displayed in red, it may not have represented uncollateralized indebtedness at all, but rather his temporary balance until the stocks underlying his assigned options actually settled into his account.

 Robinhood trading is a new phenomenen but probably it won't last; flipping stocks around won't make these people billionaires like Elon the boss. It takes decades if ever!

Institutional investors with deep pockets might take advantage of these Robinhood traders and bet against them. All data is available out there on Robintrack.net for them to take advantage of it.

Ok, how about TESLA stock? What relation Robinhood traders have with our stock?

Here is a chart which might give and indication of where these dumb speculators stand in relation to TESLA stock. As you can see, they are going GA-GA over it 😎

Good luck!