The preferred brokerage app of millennials, Robinhood has democratized investing in a way the deep-discount brokerages of the past never could.
Easy access, no commissions, and free stocks have lured in millions of first-time investors. Because investing in the stock market is one of the best ways to build long-term wealth, Robinhood has done its users a solid by introducing them to the market.
Unfortunately, day trading, a get-rich-quick mentality, and the latest buzzworthy trends are also very popular on the investing app, though such thinking has always been a part of stock investing. Robinhood has just made it easier and cheaper to lose a lot of money fast.
As a result, the list of the top 100 stocks Robinhood investors are buying is an eclectic mashup of strong, buy-and-hold type businesses and read 'em-and-weep operations. Here are six of the more intriguing names on the list.
1. AMC Entertainment
Movie theater operator AMC Entertainment (AMC -3.74%) really didn't pop up on Robinhood investors' radars until after the November elections as the availability of a COVID-19 vaccine made the potential for a quick post-pandemic recovery that much more realistic. While the Reddit rally of January put AMC on many people's buy list to take advantage of the short squeeze, the stock is still up almost 400% year to date, and the biggest cinema chain worldwide now has 99% of its theaters open, albeit with reduced seating capacity. With studios starting to release their major films again and tens of millions of people now vaccinated, investors need to ask themselves whether all of the good news is already priced into AMC's shares.
Cruise ship line Carnival (CCL -0.15%)(CUK 0.00%) is another play on easing COVID-19 restrictions, and its stock has nearly doubled in the past year. The Centers for Disease Control, however, has other ideas. It just dashed the industry's hope of resuming voyages this summer by extending its conditional sail order until November, despite Carnival and other cruise operators having plans in place to keep their passengers safe. Companies in this industry took on a lot of debt to make it through the crisis and getting back out to sea is critical to their survival. More delays could sink smaller outfits while pushing recovery for the largest cruise lines like Carnival even further into the future.
3. Churchill Capital Corp IV
Special purpose acquisition companies, or SPACs, are all the rage now as an easy, more cost-effective means of taking a company public. While SPACs are ultimately an investment in search of an idea, there is a countdown clock attached with typically two years to find a target. Churchill Capital Corp IV (CCIV) has landed its big fish: luxury electric vehicle maker Lucid Motors. After weeks of rumors, the SPAC and the carmaker confirmed Lucid would be going public at an expected $24 billion valuation, making it the largest SPAC deal ever and creating more competition for Tesla. The deal is expected to close in the second quarter, and the EV company's stock will trade on the NYSE under the ticker LCID.
Walt Disney (DIS 3.33%) is a household name that arguably should be in almost every investor's portfolio. Massive, stable, and with far-flung operations that span several industries, the entertainment and media giant's businesses are closely intertwined, often boosting the prospects of one another as they grow. A movie inspires toys that are turned into theme park attractions and appear as TV show spinoffs. While the pandemic showed that this could also work against Disney when theaters, theme parks, and new productions shut down, a once-in-a-lifetime event is actually the exception that proves the rule. And now that its theme parks are reopening, its movie studios are releasing films, and its hit streaming-video service is online, Disney looks set to return to its stable and prosperous ways.
GameStop (GME 0.49%) was the poster child of the January Reddit rally as Robinhood investors piled into the stock to drive up its shares, resulting in a massive "gamma squeeze" against short sellers. But that has also turned into support for a business that is embracing its transformation into an online retailer to take on the video game industry's own digital migration. Yet with its stock up 860% so far this year and over 4,000% in the past year, the market has already baked all of the retailer's potential into its stock -- and then some. With activist investors now running the company as most of its board of directors will be leaving, the GameStop of next year might not resemble the one you knew last week.
6. Riot Blockchain
Cryptocurrency mining stock Riot Blockchain (RIOT 0.29%) has turned in a performance almost as good as that of GameStop. Bitcoin, the world's largest digital currency, has itself soared over 780% in the past year and currently trades at over $55,000 as of this writing. Because Riot Blockchain is paid in Bitcoin for validating Bitcoin transaction groups called blocks, the more the cryptocurrency rises the more its payments are worth. So long as Bitcoin rises in value, Riot Blockchain's value seems assured. The problem, of course, is what happens if the cryptocurrency's value declines as it has in the past. Because it is so dependent upon Bitcoin, Riot Blockchain is going to be a volatile ride regardless.