Investors using the Robinhood online trading platform love healthcare stocks these days -- but not just any healthcare stocks. A look at the most popular stocks on the platform shows us that Robinhood investors are favoring companies developing vaccines or treatments for COVID-19, the illness caused by the novel coronavirus.

Person in suit holds  pile of cash with masked globe on top

Image source: Getty Images.

In fact, of the 11 healthcare stocks in the ranking, eight of them have been in the news recently thanks to their coronavirus work. Robinhood investors are buying shares of Moderna (NASDAQ:MRNA), Inovio Pharmaceuticals (NASDAQ:INO), and Sorrento Therapeutics (NASDAQ:SRNE), to name a few. All three are clinical-stage biotech companies, meaning they don't yet have products on the market.

Robinhood stock Coronavirus program Clinical trial stage YTD share performance
Moderna vaccine  phase 3 220%
Inovio vaccine  phase 2/3 to start in September 190%
Pfizer vaccine  phase 2/3 (7.2%)
Sorrento Therapeutics vaccine, treatment, diagnostic most advanced program: phase 2 94%
iBio vaccine, therapeutic preclinical 675%
Novavax vaccine phase 2 2,235%
Gilead Sciences therapeutic emergency use authorization granted 1.6%
Johnson & Johnson vaccine phase 3 to start in September 1.9%

Sources: Finviz.com, company data.

Now the question is: By betting heavily on coronavirus work, are Robinhood investors setting themselves up for big losses?

Risk is no stranger to those using the Robinhood platform. They are often young, inexperienced investors who aim to score rapid gains. Sometimes, this involves betting on the most talked-about stocks of the moment. So the fact that they've piled into coronavirus stocks isn't surprising.

A potential loss?

While some Robinhood investors may have already locked in short-term gains on their coronavirus bets, others who invested later might be sitting on a potential loss. Moderna, Inovio, and Sorrento are down 34%, 70%, and 65%, respectively, from earlier highs this year. If these investors hang on to their positions longer rather than selling at a loss, they may eventually end up winning -- or not.

If Moderna, for example, wins the coronavirus vaccine race, the shares surely will climb. Though rivals' shares might immediately suffer as that happened, all would not be lost for those players. Considering each company's manufacturing capabilities and the demand for a vaccine, there is room for more than one product on the market. The same goes for coronavirus treatments. This means that, in the longer term, more than one of these companies may offer investors great share performance.

But if some companies fail in clinical trials, or if one product is deemed highly superior to the rest, major share losses may be on the horizon. COVID-19 vaccine and treatment candidates are still in clinical and preclinical testing. Failure can happen at any time -- even during a late-stage trial.

There is also uncertainty regarding the future of COVID-19. Governments are already buying up potential vaccines -- but will they be doing so in a few years? It's too early to know whether the virus will remain a serious threat down the road.

So, what's an investor to do?

The answer varies depending on investment style. Aggressive investors may consider a position in one or two of the clinical-stage biotech companies working in the space. If these companies are successful, they're likely to post bigger share gains than their big-pharma rivals. We've seen this so far with Moderna, which has gained 136% since March 16, when it announced the start of clinical trials for its coronavirus vaccine candidate. Meanwhile, pharma giant AstraZeneca's (NYSE:AZN) shares have increased by just 2.5% since it entered the vaccine race on April 30 -- and that's before its vaccine study was put on hold Tuesday afternoon. 

Investors who prefer less risk, however, should either avoid coronavirus stocks or choose shares of large pharmaceutical companies in the field, such as AstraZeneca (pending more news about the pause of its program) or Pfizer (NYSE:PFE). If their coronavirus programs fail, their marketed products will keep revenue flowing.

That's only part of the answer, though. Here's the rest, and this applies to all investors: Always diversify. It's as simple as that. I think Robinhood investors who go all in on coronavirus stocks -- for instance, buying shares of a handful of players and skipping other healthcare investments -- will eventually regret it. They might win with one or two, but the losses from others may be big.