The Retail Stock Boom

• Author: Michael Bordonada
• Posted: 2024-05-10

The month of January saw one of the wildest stock market stories of all time: The short squeeze of Gamestop, in which retail investors - fueled largely by Reddit - shot the Gamestop stock through the roof. The impact of that stock gain remains in effect today, with Gamestop's stock still significantly higher than its fundamentals would suggest.

This book was both a cause and an effect of the massive spike in retail stock purchases and uses, as more and more people use various platforms like Charles Schwab and Robinhood. This boom has also been fueled by the massive rise in cryptocurrency, which can be seen by the wild success of Coinbase's IPO.

More and More Retail Stock Subscribers

One of the largest platforms for retail stock platforms is Charles Schwab, which offers a wide array of retail stock trading options at low or no cost. Recently, Schwab offered released their first quarter results, which revealed a huge spike in new customers: 3.2 million in 2021's first quarter. That is not only a large number, but it is larger than the 2.4 new customers they grew in all of 2021. This shows a massive spike in popularity, but it wasn't all. Daily trades quadrupled from, their 2019 average, with 8.4 million trades, on average, executed on the platform.

Schwab discussed many reasons for their popularity, which grew despite the worldwide economic turmoil that followed the COVID-19 pandemic. Chief among them: The Gamestop short squeeze, which pressed many non-traditional investors into the stock market by demonstrating just how easy it may be for some investors to make money. This, of course, does not come without risk, but more people seem to be willing to take that risk.

Of course, Charles Schwab isn't the only platform to show major growth. Robinhood also saw major growth, both in terms of its stock business and its crypto sales. In February, Robinhood announced that it saw a growth of six million new users who were using the service to make crypto purchases and sales, a number that more than doubled its previous total user base. Furthermore, despite the fact that Robinhood was accused of anti-competitive trading when it limited Gamestop's sales, its downloads increased by almost 400% during the week of January 31 - the same time that the Gamestop spike was at its peak

Coinbase's IPO

Coinbase has been around for the past few years, primarily operating as a brokerage for cryptocurrencies. The website and app serve as a brokerage that allows users to buy and sell thousands of types of cryptocurrency. It also allows for users to learn more about selling, enabling them to feel more comfortable with getting involved in crypto-trading.

Coinbase had an IPO in mid-April, and the IPO was a wild success: At it's highest, the stock hit $429 before closing at a more reasonable $328 - a 31% jump from its $250 IPO. The rise of Coinstock's popularity has occurred for many reasons. First, of course, is the fact that more and more people are using retail apps to trade. Crypto - despite having features that have been described by some as bubble-like - has also seen massive increases. Bitcoin, the most popular and well-known form of cryptocurrency, has increased to above of $60,000 per coin. This is a nearly doubling in price, with the price per coin being $29,000 at the beginning of the year.

Of course, it is more than just the general popularity of crypto. The positive environment for retail trading apps has been a huge boon for Coinstock, which is turning a regular profit. It has also shown heavy user growth, and that growth is expected to continue as time goes on. Coinbase has proven to be popular because of its low fees, ample resources for new buyers, and high levels of security. All of this helped fuel the IPO.

In general, the popularity of retail investors, the economic stimulus, the positive growth of the stock market, and the success of companies like Coinbase all live in the same financial ecosystem. They are all fueling each other's growth, and at the moment, that rate of growth seems set to continue into the near future.