I think we are in danger of semantics here. Perhaps its all on the same risk spectrum but ultimately there’s an important point of distinction. If you can’t see it, it’s possible you are really just making uninformed bets and swinging in the dark all round. I highly recommend reading Warren Buffett’s essay, The Super Investors of Graham and Doddsville to better understand the distinction.
Anytime you put money into anything with a chance of losing it or gaining more it’s a gamble. If it pays off it was a worthwhile investment.
When you invest in a company you are betting on an outcome that you expect that investment will grow based on your own, hopefully informed, predictions. When you place a wager you are betting hoping for a greater return on that wager based on your own, again hopefully informed, predictions. Yes some gambling is entirely random like the lottery but most such as sports wagers, card games, etc need just as much knowledge and skill to be successful as playing the markets does. Any investment is a gamble because you can never fully know the outcome.
But with regards to Robinhood I would say right now that gamble is probably too big imo. Unless you got in early when it was very cheap and are still sitting on a profit it would be a big risk to expect it to make any big upturns in the short-medium term and there simply isn’t enough data to predict long term potential at this point.
$HOOD is trading at twice the PE of $NSDQ or £HL.L - these aren’t perfect comparisons but the two mentioned are profitable business with a stable revenue.
Robinhood is all about the fees with limited recurring revenue. As some other have pointed out they’ll struggle next Q as crypto made such a large amount of money for them and is unlikely to repeat this.
Yeah as a business they are basically reliant on the memestocks craze to keep them relevant to a wide audience. A decent memestock once or twice a quarter might help keep their income flowing and occasionally trigger brief share price spikes but realistically that’s not a viable long term plan with various financial and political powers already making moves to try and stop another Gamestop happening.
Unless a major tech company starts sniffing around looking for a takeover we probably won’t see much significant spikes beyond what we have already seen.
I can’t help think some funds will encourage this to happen as so many must be making a killing from the ups and downs of meme stocks. I’ve done really well % wise but with small amounts so imagine what the whales can make and so many people will chase the next GME and lose out in the future.
Memestocks are good when a company needs a quick injection of cash and some free publicity but they can also put off long term high volume investors because they create too much uncertainty.
Look at Gamestop. They had been in decline as a business since 2016 and were laying staff off and closing stores even before Covid. Then they got a lot of bad press for the treatment of their staff during the pandemic.
Becoming a memestock gave the press something different to write about them and brought in a lot of income. But the longer term effects have been very erratic share prices and as many people losing money as making it.
That’s why I said “some funds will encourage” as it is them that manipulate and make the money not the companies with the meme buzz around their name. Of course some will do well but many won’t. My point is people often only talk about HF’s losing out but I would bet a very large amount that there is more money being made by “whales” from the meme craze than lost overall.
This is my point totally and retail will keep believing that a stock is about to go to the moon if Reddit says it is. I just feel the big money has learnt it’s lesson and will/has adapted to actually use the influx of retail money hoping to win big to cream the profits whilst allowing some to win so they promote the idea of memes.
It just feels like playing a fruit machine now, you know you can win but the odds are that you don’t with new meme stocks. Obviously that is just my view and still I bought back into GME last week
Jason Calacanis said on this weeks all in podcast that his fund (that was up 50x) on its Robin Hood investment is about to distribute the shares to its investors. I don’t know if they’re locked up but if not you could see a sell off