‘Meme’ Marketplace Stock Price Reflects Meme Investing Volatility
A share price is normally just a share price. But here’s an instance of a stock’s moves which actually represent the nature of the business itself. “Meme stock” marketplace, Robin Hood, was recently floated in the US. The company has a share price as volatile as the meme surges it has facilitated.
Trading and investment platform Robinhood’s ($HOOD) debut on the NASDAQ last week was one of the most hotly-anticipated fintech listings to have ever graced the public markets.
But on opening day, it looked as if the fintech had fallen at the first hurdle: getting its own customers on board.
Share prices in Robinhood tanked by about ten per cent within the first few minutes of trading, eventually recovering slightly to close the first day down 8.37 per cent.
It now looks as if the trading platform has rallied. At the time of writing this article, Robinhood’s share price is up by nearly 63 per cent to $63.06 per share, on opening day it closed at $34.82.
As a result of the volatility, trading of Robinhood’s shares was halted several times on Wednesday afternoon after the price reached highs of $85.
On Wednesday morning, more than 39m Robinhood shares had been traded, more than half the firm’s 30-day average volume.
Robinhood’s price volatility is an undeniable marker of ‘meme stock’ traders, who flooded the stock market earlier this year in a Reddit vs. Wall Street battle that saw everyday traders make millions.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
That figure is the result of over £24 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
- Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.