It has been a crazy year for both traders and investors. Markets crashed in March and have subsequently recovered nearly all their losses. Some investors have struggled, while others have made fortunes. It has been particularly interesting watching “Robinhood stocks.”
Younger traders have gravitated to Robinhood for its commission-free trades and easy-to-use application. As such, looking at Robinhood’s most popular stocks gives us a window into what traders have focused on during this turbulent year.
As you may have heard, Robinhood recently changed its data application programming interface (API). Going forward, Robinhood is no longer showing how many of its users own a stock through its external API. This will disable many of the sites that followed Robinhood. Robintrack, for example, had a leaderboard of the most popular stocks on Robinhood. It also showed the biggest increases and decreases in popularity every day, and had charts showing the correlation between ownership and stock price over time.
On Friday, Robintrack announced that it will no longer be able to update its data due to the API change. However, it left up the leaderboard of Robinhood stocks popularity, giving us a final look at which companies really clicked with traders.
Here are seven Robinhood darlings that stand out:
- Ford (NYSE:F)
- Apple (NASDAQ:AAPL)
- Delta (NYSE:DAL)
- Amazon (NASDAQ:AMZN)
- Aurora Cannabis (NYSE:ACB)
- Nikola (NASDAQ:NKLA)
- SPDR Gold Trust (NYSEARCA:GLD)
Here’s what we can learn about trading from them.
Robinhood Stocks to Watch: Ford (F)
Final Robintrack Ranking: No. 1
Robinhood Users Holding F Stock: 911,470
In a send-off to Robinhood’s popularity rankings, we have to start with the champion. As it turns out, the king of trucks is also the king of Robinhood. More than 900,000 Robinhood investors had invested in Ford as of Friday.
What explains the company’s popularity? Like many of Robinhood’s top stocks, Ford is an iconic brand and currently trades for a low stock price. That’s a winning combination on Robinhood. General Electric (NYSE:GE), for what it’s worth, rode the same formula to the No. 2 most popular stock in Robintrack’s final rankings. Investors feel comfortable establishing positions in famous brands as they are starting out on their investing journey. And Ford certainly gets the job done on that front.
Robinhood has also long had a tradition of giving out a free share of stock to new users when they sign up. Ford, as a low-priced popular stock, has been a major participant in this program. Many Robinhood users have received free shares of Ford and held on for the ride. Will their loyalty be rewarded? So far, Ford has been a poor long-term investment.
However, Ford stock really took off on Robinhood in March as the share price crashed. Nearly everyone that bought it since that point is now solidly in the green. With consumer spending coming in quite strong, Robinhood’s top position could surprise many skeptical professional analysts and post further gains.
Final Robintrack Ranking: No. 3
Robinhood Users Holding It: 730,774
The media likes to make a lot of snarky comments about Robinhood traders (and Robinhood stocks). Journalists enjoy mocking the traders that buy into flavor-of-the-week penny stocks in particular. And sure, there’s definitely some of that happening on Robinhood.
But let’s give credit where it’s due. Robinhood traders won — and won big! — on AAPL stock. In fact, they traded it almost perfectly. Robinhood’s users picked up a sizable position in the stock on the dip in late 2018. They lightened up in late 2019, taking profits as Apple’s shares surged.
And then, starting in early March, Robinhood traders absolutely plowed into AAPL stock at an astounding pace. In less than two months, more than 100,000 Robinhood traders added Apple to their portfolios with the share price below $300. The popularity surge has continued since then — Robinhood’s user base has continued adding Apple stock on the recent run up above $400. So far, it has been a great call.
Delta Airlines (DAL)
Final Robintrack Ranking: No. 7
Robinhood Users Holding It: 572,679
Delta, along with the cruise lines, will go down as the shining examples of Robinhood trading the novel coronavirus. Delta was hardly followed on Robinhood prior to the pandemic; it had just 12,000 users holding the stock last year. In late February, however, traders started pouring in, and the buying only intensified up through May.
Ultimately, we don’t know how it will work out for Delta. It’s still far from certain when the travel industry will start to recover. And much of the industry’s near-term hopes are tied to more government aid packages.
However, like with Apple, we can credit Robinhood’s traders for a great run. Delta’s ownership position on Robinhood peaked in early June. That was right at the top of the re-opening trade, when DAL stock had shot back up from $20 to $37 in a few weeks. Robinhood sold the pop, and Delta has seen its ownership levels decline while the share price has slumped back under $30. Well-played.
Final Robintrack Ranking: No. 12
Robinhood Users Holding It: 427,973
Amazon needs no introduction of course. The e-commerce giant has been a winning investment for years. And the pandemic only accelerated Amazon’s triumphant rise over its retail rivals. As if that weren’t enough, Amazon has also seen its web services business surge this year as more companies sign on for remote working solutions.
What’s interesting with Amazon, as it comes to Robinhood, is its sudden rise in popularity. Until March 2020, Amazon was around just 100,000 users who owned the stock. That’s a large number, to be sure, but it wasn’t yet one of the most popular Robinhood stocks.
What changed this spring? Robinhood rolled out fractional share trading for most of its clients. This meant that customers could put in a fixed dollar amount, say $50 or $100 and buy part of an Amazon share. Previously, Amazon’s huge price tag made it difficult for many clients to spring for a full Amazon share. The average Robinhood account balance is significantly smaller than at traditional brokerages, and thus it’d be hard for many investors to build a diversified and balanced portfolio while allocating $2,000 or more to AMZN stock.
Since fractional shares came online, Amazon has positively exploded in popularity. Between April 1 and June 30 of this year, the number of Robinhood users holding Amazon shares tripled. While stock splits are back in the news, Robinhood’s user data makes it clear that stock splits may become a thing of the past. The popularity of Amazon in fractional share trading showed that Robinhood has already made expensively priced stocks available to average investors.
Aurora Cannabis (ACB)
Final Robintrack Ranking: No. 11
Robinhood Users Holding It: 430,303
Amazon is fascinating as it shows the power of fractional shares. Aurora Cannabis tells another interesting story of trading behavior. For a while earlier this year, ACB stock was right at the top of the Robinhood leaderboard. It hit 990,000 users holding the company’s shares at one point. It was a pretty remarkable development, nearly a million Americans all holding stock in one small and speculative marijuana company.
However, as you see, Aurora’s final ranking at Robinhood was No. 11, not No. 1. What happened to drop it a few pegs down the leaderboard? Earlier this spring, Aurora performed a 1:12 reverse split. Meaning that if you owned 120 shares previously, you’d have 10 after the split was executed. Aurora stock was trading well under a dollar per share at this point, and needed a higher stock price to retain its stock market listing.
Here’s the kicker. In a reverse split, if an investor holds an odd number of shares, usually the fractional ones are paid out as cash. For example, say you have 100 shares of stock. You can’t evenly divide 100 by 12, as it would result in 8.33 shares. So, in a reverse split, you’d get 8 shares of stock, plus a nominal cash consideration for the remainder. But for many Robinhood holders, they had fewer than 12 shares of ACB stock in the first place. Thus, they got no shares of stock once Aurora Cannabis finished its reverse split.
Here’s how we know. On May 9, heading into the reverse split, 990,552 Robinhood users held ACB stock. On May 11, after the split, more than half of Robinhood’s users were gone; just 457,394 ACB stock holders were left. Thus, it seems, around half the user base held fewer than 12 shares of ACB stock and thus got cashed out in the split.
Aurora Cannabis serves as a wonderful reminder that stocks aren’t necessarily cheap just because they trade at a low quoted price. And indeed, the company’s popularity has plummeted since the reverse split, even though the underlying fundamentals haven’t actually changed. All of this has made it one of the more interesting Robinhood stocks to watch over the past few months.
Final Robintrack Ranking: No. 37
Robinhood Users Holding It: 207,033
Nikola is fascinating because its shares just started trading under this name and ticker symbol back in June. Yet Robinhood investors have already elevated it into the upper echelon of popularity.
Nikola is a highly controversial stock. The company’s vision is grand, and its hydrogen-powered vehicles have the potential to upend both fossil fuel cars and Tesla’s (NASDAQ:TSLA) electric models. However, many folks have criticized Nikola, suggesting it’s more hype than reality. I count myself as a Nikola optimist. I don’t hold a position at present, but I wish chief executive officer Trevor Milton and his team well.
In any case, Robinhood’s users are also quite optimistic. Interestingly, they’ve consistently accumulated NKLA stock all summer. When it goes down, they’ve bought more. And now, Nikola has rallied 50% over the past few weeks, and Robinhood users are still increasing their holdings. For all the controversy around Nikola, it appears that Robinhood’s members are willing to buy and hold Nikola shares for the long-run. That’s something bears should keep in mind before taking short positions against the company.
SPDR Gold Trust (GLD)
Final Robintrack Ranking: No. 188
Robinhood Users Holding It: 40,286
Finally, we pay our respects to one of Robinhood’s fastest climbers on the popularity leaderboard, the SPDR Gold Trust exchange-traded fund. This ETF was surging all summer. With the gold price topping $2,000/oz for the first time in history recently, traders have been looking for a piece of the action. Just since June, the number of Robinhood traders holding GLD has doubled, and GLD shares often appeared on the Robinhood most popular lists in recent days.
It has been quite a run for gold. Back in 2018, fewer than 5,000 Robinhood users owned the GLD ETF as the metals languished in obscurity. It seemed that Robinhood’s younger traders just didn’t take to the appeal of precious metals. The current pandemic has created a demand for safe haven assets and put gold back on everyone’s radar, however.
And who knows how high GLD could have climbed in coming days on Robintrack’s leaderboard. On Friday, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) disclosed that it had taken a $600 million stake in gold mining firm Barrick Gold (NYSE:GOLD). With even Warren Buffett — a long-time gold critic — now involved in the space, the sky is the limit for GLD’s popularity going forward.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek. At the time of this writing, he owned BRK.B stock.