Institutional investors are making bets, and it is working well so far


COVID-19 has attracted many millennials into buying stocks. The article Young investors pile into stocks, seeing ‘generational-buying moment’ instead of risk, states that “the major online brokers — Charles Schwab, TD Ameritrade, Etrade and Robinhood — saw new accounts grow as much as 170% in the first quarter, when stocks experienced the fastest bear market and the worst first quarter in history.”


A record number of new trading accounts opened in 2020, with Robinhood topping 13 million users in March 2020 from 3 million users just two years ago in February 2018. The question is then, have these young individual investors been successful? At least so far, the answer is yes.


One of the successful examples is Nikola Corporation (NKLA), an American hybrid truck design and manufacturing company based in Phoenix, Arizona. Along with the explosive rise in share price and popularity of Tesla, this hydrogen-electric trucks manufacturing company has soared, jumping 600% in share price since its IPO in March 2020. It has come down since then, but this is still very promising.


Along with the surge in share price, individual investors have been piling into Nikola Corporation shares. For example, Robinhood application releases its data on number of users holding a specific stock. As of June 20 2020, 160,000 users hold at least a single stock in Nikola Corporation and they benefited from surge in its share price.


Robinhood institutional investors holding NikolaSource:


This is the number of users, so it is not clear how many stocks in total are held by them. However, what it shows is that the US market that has predominantly been dominated by institutional investors may now see the rise of a new host of new millennial investors influencing the market.


Is this a good phenomenon? It is difficult to make a judgement but it clearly shows that the stock market is witnessing a new driver coming into play.


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