It has been a roller coaster year for Robinhood users.
Popular trading app Robinhood and its investors are once again in the spotlight heading into the third quarter after the company officially filed for its highly anticipated initial public offering in late June. Robinhood reported nearly 18 million active users in its filing and about $80 billion in assets. The company also estimates nearly half of all new U.S.-funded retail accounts opened from 2016 and 2021 were Robinhood accounts. The relatively young and inexperienced Robinhood trader base has had some huge hits and misses in recent quarters. Here are the eight most popular stocks owned by Robinhood users.
Ford Motor Co. (ticker: F)
Electric vehicle stocks are extremely popular among young investors, but legacy automaker Ford is the top holding among Robinhood users in the third quarter. Ford's recently launched Mustang Mach-E EV has been a massive success and even won Car and Driver's 2021 EV of the Year award in early July. In May, Ford upped its planned investment in EV and autonomous vehicle technology from $22 billion to $30 billion through 2025. Ford trades at a much more compelling valuation than leading EV startup stocks, and the company generated $3.3 billion in net income in the first quarter.
Robinhood investors are going all-in on the future auto market, and Tesla is the early EV market leader. Tesla reported an impressive 73.5% revenue growth in the first quarter, but critics point out that the company's core auto business is still not profitable without help from regulatory credit sales. Tesla was a huge winner for Robinhood investors in 2020, finishing the year up about 700%. Unfortunately, Tesla is down about 10% year to date amid rising EV competition. Piper Sandler recently estimated that Tesla will still maintain a 10.1% share of the global EV market by 2040.
Year in, year out, iPhone maker Apple continues to be one of the most profitable companies and consistent performers in the market. After reporting $57.4 billion in net income and $274.5 billion in revenue last year, Apple reported 53.6% revenue growth and 110% net income growth in the first calendar quarter of 2021. Apple shares gained 80.7% in 2020 and are up another 14% so far in 2021. Apple is shifting away from relying on hardware sales by increasing its high-margin recurring services revenue mix, and aggressive stock buybacks will continue to support Apple's earnings per share.
AMC Entertainment Holdings (AMC)
AMC Entertainment has been one of the most controversial yet best-performing stocks in the market in 2021. Entering the year, AMC was teetering on the brink of bankruptcy after generating a $4.59 billion net loss in 2020. However, Reddit's WallStreetBets and other communities of online retail stock traders adopted AMC as one of their most loved "meme" stocks of the year, sending AMC soaring to new all-time highs in June. AMC has taken advantage of the enthusiasm by aggressively selling shares to stay afloat, increasing its outstanding share count by 383% since the beginning of 2020.
Sundial Growers (SNDL)
There's no question U.S. cannabis legalization and global expansion are incredible long-term bullish catalysts for Sundial Growers and other cannabis stocks. However, Sundial has reported negative revenue growth in each of the past three quarters and has been consistently burning through cash. Sundial had to sell stock to replenish its balance sheet, and its outstanding share count is up a whopping 1,640% since the beginning of 2020. Sundial is one of the highest-risk cannabis stocks. The Sundial gamble has paid off well for Robinhood investors in 2021 given the stock is up 50% year to date.
General Electric Co. (GE)
General Electric is proof that Robinhood investors aren't all about meme stocks and high-flying growth investments. GE was one of the best American investments of the 20th century. But in recent years, GE ran into major problems with slowing growth, mounting debt and even an accounting investigation. GE has been selling non-core assets to fix its ailing balance sheet. GE has refocused on four industrial segments the company believes will lead to sustainable earnings growth: power, renewable energy, aviation and health care. GE hasn't reported positive revenue growth since 2016, but Robinhood investors are optimistic about the turnaround efforts.
NIO is one of a handful of U.S.-listed stocks that provide Robinhood investors exposure to the rapidly growing and potentially massive EV market in China. NIO recently reported 111.9% growth in vehicle deliveries in the three months ending in June 2021. However, the stock is down more than 12% so far in July as Chinese regulators have cracked down on U.S.-listed Chinese stocks. NIO has tremendous long-term upside, but it's not for the faint of heart given the uncertain regulatory outlook and the stock's lofty valuation at more than 20 times sales.
The Walt Disney Co. (DIS)
The stay-at-home environment in 2020 crushed Walt Disney's theme parks, cruise lines and TV and film production businesses, but it was a major tailwind for its Disney+ streaming service, which launched in November 2019. Disney's legacy businesses will certainly recover in 2021 and beyond, making the stock a compelling economic reopening play. As of the second quarter, Disney+ had 103.6 million global subscribers, while Disney's ESPN+ service had 13.8 million subscribers and its Hulu service had another 41.6 million subscribers. Robinhood investors likely see those three direct-to-consumer services as the core of the long-term Disney bull thesis.
Robinhood stocks investors are buying in Q3:
— Ford Motor Co. (F)
— Tesla (TSLA)
— Apple (AAPL)
— AMC Entertainment Holdings (AMC)
— Sundial Growers (SNDL)
— General Electric Co. (GE)
— NIO (NIO)
— The Walt Disney Co. (DIS)