The “Robinhood Effect”: a look at Robinhood app data

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Robinhood is a stock-trading mobile application that offers “zero commission” on trades. This zero-fee Silicon Valley startup caught the eye of many during the pandemic and was the highlight of talks on several media outlets, but not for good reasons.

“In early May, Robinhood reported 3 million new account openings in the first four months of the year, half of which were for first-time investors”, reports Marker. App Ape’s MAU and Download data tell quite the same story:

One could argue that the increase in app MAUs, especially in April and May, and this is when major indices such as Dow Jones and S&P 500 started to surge, have had some sort of effect on stock market. But that is not how many analysts or media outlets see it.

Markerbelieves the resurgence of retail investors is related to lack and cancellation sport events in the US. In particular, the report argues, quoting Jessica Rabe at DataTrek, that “the lack of sports betting was pushing would-be gamblers to the stock market.” But Jessica is not the expert making such comparison; Matt Levine describes stock market as “fun casino” in one of his columns.

Amongst many indicators and metrics found on App Ape is the Activation Count which represents the number of times an app is launched (activated) per day on average.

As seen above, Robinhood app users recorded year-all-time high of activating the app with more 8 times on average in July.

But is the Robinhood effect real? Not according to this CNBC article mentioning analysis conducted by Barclays’, who examined the data and found “no clear relationship between Robinhood customers adding shares and S&P 500 index moves.”

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