The hype surrounding GameStop and its stock price consumed social media and commercial television and the hopes and dreams of many retail investors. It even convinced some people that causing short-term economic damage to a few hedge funds was tantamount to destabilizing the global financial market.
It isn't, but a lot of people are doing some risky things downright with their personal capital. And some of them are making these investments - bets, let's be honest - on platforms that have lowered barriers to buying and selling shares by cutting trading fees to zero. Apps and services like Robinhood, Public, M1 Finance, and Freetrade.
GameStop, meme stocks, and retailer revenge
After indicating that some traditional brokers were restricting access to GameStop and other alleged meme stocks, TechCrunch was interested in what new app-based investment services were doing to its users.
A spokesperson for M1 Finance
A Midwest consumer fintech player offering a basket of banking and investment services - more on its growth here and here - told TechCrunch via email that it has not taken specific steps regarding individual stocks.
But the company also submitted a statement from its CEO, Brian Barnes. In his commentary, Barnes drew a demarcation between investing and trading, which he likened to a casino, adding that his company questions whether short-term trading is predictable, sustainable, or reproducible.
M1 Finance closed Series C worth $ 45 million a few months after it raised $ 33 million from Series B
It's not for nearly anyone, of course. Barnes went on to say that his company believes that corporate ownership and large assets at reasonable rates that accumulate for long periods of time is the most direct and common way of building wealth and that they have focused their company more around this spirit, letting go of the obsession of the moment.
Turning to the well-known Robinhood, an impressive growth story for 2020, TechCrunch begs the same question regarding warnings or other protective barriers for users regarding some stocks.
The thing that's worth noting about the companies we're discussing is that none of them wants to be classified as the place people like to trade the most. I'm glad that cutting the fee to zero, which they did pretty much, is a great way to democratize investment, and also a great way to encourage people to trade more often. And since apps and services that offer free trading often make money when users trade (read this), their conversations about users ’focus on buying and carrying rings are always a little weak.
Social Equity Trading Services General Leverage of $ 65 Million Series C.
Anyhoo, some apps go as far as adding warnings. Public, a company recently covered by TechCrunch, said the company has added high-risk security stickers to meme stocks that are causing a lot of hype.
The public has always had a clear focus on community building rather than deliberation, which led to us being asked one or two questions about when to start monetization plans. The company has just hired a CFO, which is making the move appear in concert with its general spirit, so we're assuming more to come.
