God Bless Retail Investors and The Degenerate Economy – Some Data from Stocktwits, Robinhood and Coinbase

Good morning to all my degenerate friends here…

Here is what retail traders/investors think of institutions in 2023 and 2024…

I don’t like writing very long posts so I am going to do a series of posts over the next week on the data released by Robinhood at their investor day and some data from Stocktwits.

I am getting older, which means a little meaner and grumpier, but I will always have a soft spot for retail investors. I have been one my whole life.

There have been many ‘flippenings’ in the investing world, but one big new one has been the power of retail investors. Here is some data from Robinhood:

Right or wrong, smart and dumb, ‘degenerates’ and closet Warren Buffet’s, there is no going back.

The growth and staying power of retail investors is not a threat to institutions, it is a boon. They will be forced to get better.

Twitter, Stocktwits, Reddit, YouTube, TikTok, Instagram….reading sentiment, tracking sales data, following the ‘great white sharks’ …alpha has never been more distributed.

At the same time that alpha is being distributed, indexing has never been easier or more effective.

Way back in 2014 when we invested in Robinhood I wrote that Silicon Valley was the new Wall Street. I was right and wrong. I should have just said the new Wall Street would be distributed. From the 2014 post:

Today, on Stocktwits hundreds of thousands of traders and investors are posting to our streams every day and monitoring the ideas and chatter.

In order to include more of the lurkers/eavesdroppers and people that don’t care to post (the 90 percent), we have added polls to our ticker streams that are both AI driven based on the trending sentiment and crated by our community team. Quickly, tens of thousands of unengaged usres are contributing.

Will the data and sentiment and polls always be accurate…NO.

Is anyone’s? ….NO

But I do know our data is unique and now something I have to check each day, especially around events like earnings. Some examples:

The Stocktwits community got the Trump election win dead right (70 percent of 80,000 unique votes a few days before the election for instance. Just yesterday, we ran a poll on $AVGO (Broadcom Semiconductor) earnings.

Almost 70% of voters on Stocktwits thought $AVGO would beat earnings with bullish guidance 👀

— Stocktwits (@Stocktwits)
9:51 PM • Dec 12, 2024

When I wrote that post about Robinhood in 2014 and talked about API’s, another company we invested in did not yet exist. That was Alpaca. I was pitched by Yoshi in 2016 and I think we (Social Leverage) invested in 2018. Building pipes/reg tech and systems from the ground up for the next 1,000 Robinhood’s to bloom has been a grind, but today it seems like every day, and globally, a new Robinhood is blooming:

is transforming investing for Latin Americans! 🚀

By partnering with us, they make US equities accessible for as little as $1 USD.

The results?

1. $7M+ USD in AUM
2. 80,000+ orders processed
3. 10,000+ new clients

Learn about tyba’s story: bit.ly/3Ztwkiw

— Alpaca (@AlpacaHQ)
3:00 PM • Dec 12, 2024

One reason I am so excited to be back as CEO of Stocktwits is the growing tide of new investors being onboarded by Robinhood, Coinbase, Alpaca and their competitors.

They need a place to learn, share ideas, get ideas and chatter. We are building that place.

There will be fits and starts, booms and crashes, bad actors and the next Warren Buffet’s, Worldquants and Daniel Loeb’s. Markets are not just for Bloomberg and Goldman Sachs.

Finally for today, you may hate crypto, but it will not go away. One chart I watch closely that has been breaking out to all time highs is the total crypto market cap.

I look at the total crypto market cap often…we win either way…if it goes up , some degenerates get rich and spend money

If it goes down, we took a lot of money out of the system to temper inflation

— Coronado ‘Porch’ Lindzon (@howardlindzon)
2:27 PM • Dec 13, 2024

The biggest beneficiary of this crypto boom in the USA is still Coinbase (Coinbase, Bitcoin and Robinhood are in my Degenerate Economy Index).

Just last week Stocktwits opened an account at Coinbase. Many of our customers want to pay us in crypto (for us that is Stablecoins backed by US dollar). Coinbase has a giant new market and can be the JP Morgan/Chase/Wells Fargo for a new form of business account that will be proliferating as the crypto economy expands.

While Michael Saylor is daring/urging Amazon and Microsoft to set up a treasury in crypto for their companies, it is smaller companies like Stocktwits (we are profitable and have plenty of cash reserves), that are happy to keep some of our revenue received in crypto on Coinbase, most likely Bitcoin and stablecoins.

A brave new degenerate world.