Robintrack Newsletter (8/12/2020)
On the future of Robintrack, the last hurrah, and what to expect.
Happy Wednesday, all! By now, I’m sure many of you have seen the news that Robinhood is planning to pull back access on its API—which includes access to popularity data. In advance of the announcement, the team at Robinhood took time to talk with Robintrack’s core coder, Casey. They indicated that the main reason for withholding this data was that certain parties were using the API and data in a way which was intended to harm users on the platform.
In its time, Robintrack shared many of the values that Robinhood held about democratizing access and increasing transparency in the financial sector. Many hedge funds and large institutions purchase order data in a paradigm where the “highest bidder wins” access to user information and holdings. The goal of Robintrack was to make that information free — and though this is a disappointing development, it is completely understandable and we respect the opinion of the Robinhood staff.
That said, much of our absence here can be attributable to some of these developments — and some consideration about the future. This week’s newsletter is going to be the final one of its format before we go in a different direction — with a new name and new focus. But for now, let’s focus on covering the last 30 days on Robintrack:
There are few surprises, but the big surprises are big
A shortcoming of writing a weekly newsletter about social trading is that current conditions call have constructed a market built on the rise of tech, healthcare, pharmaceuticals, and semiconductors. That said, there is absolutely no surprise that the most acquired stocks of the month are ones hailing from these industries: Apple, Moderna, Microsoft, Tesla, Pfizer, and the like.
There is a surprise, however, when a company’s management dramatically shifts directions — which is exactly what Kodak did. The camera giant’s midlife crisis gave rise to a 1400% increase in the stock after the company announced it would be making an entry into the pharmaceutical space. Over 86,300 people bought $KODK. However, the gains were short-lived and the future of the tech-pharma is marred in potential legal ramifications.
IPOs continued to make a presence in the social trading sphere as Rocket Companies ($RKT) IPOed this month, with over 71,574 people picking up the stock.
In an alike way, SPACs—blank check companies—have continued to attract the interest on both sides of the market. Nikola, the opportunistic EV company, came to markets in a SPAC arrangement and burst onto the scene. Dozens of EV and green energy companies followed suit. Now, leisure giant Top Golf is looking to come to public markets in a SPAC arrangement.
I think a fair assessment can be made as we close the book on this chapter: if people are writing about it, people are going to buy it. The media has painted these stocks as the selections of “Robinhood daytraders” — but they largely missed the point. People didn’t just buy stocks because lots of people were holding the stock on Robinhood, it’s because they saw the news too — when we say social trading, we’re talking about the influence that the media has too.
People are taking their money elsewhere
A few months ago, we remarked about the fact that nearly all of the top 100 ‘most popular’ stocks were from added positions. As Robinhood scaled quickly, we attributed much of that growth to user growth — rather than a greater indication of something in particular. However, those tides have changed: 66 out of 100 stocks in the last 24 hours are stocks with decreased holdings. Abandonment of certain stocks is happening in the hundreds, even thousands. Adjusting the lookback period to three days, one week, or one month implies an increasing value of outflows. For comparison, the one month lookback has only 29 out of 100 stocks with decreased holdings.
It’s telling a story, but we’re not sure if it’s a matter of folks taking profits (see our point on commodities, two stories down), abandoning positions, or abandoning Robinhood at large. As people are selling completely out of positions to do with travel, weed, and tech? It makes us curious where the money is going. Obviously, a large volume of traders are selling at a loss — especially in those former two categories. Something that we are going to cover, to some extent, below.
Travel and leisure won’t recover soon
The biggest losers in the month are folks bailing from stocks that have to do with travel and leisure. One of our first Robintrack newsletters was about the rush to travel and leisure stocks such as American Airlines ($AAL), Royal Caribbean ($RCL), and MGM Resorts ($MGM). They’re joined by plenty of other stocks in the airline, cruise, travel, and leisure industry.
A question we had was: “will the gains last?” We largely derived that the answer would be based on how quickly America fought the pandemic and returned to normal. It’s still largely assumed that these stocks will return to pre-pandemic normals in a few years.
The coronavirus is not the first major event to shake these industries — it won’t be the last, either. Just ask Disney ($DIS), who is having their first reported loss in nearly two decades. A lot can be said about the circumstances that are affecting companies right now, but how well they planned for the unexpected and continue to plan will largely affect their comeback. Despite this, not everyone is patient enough to weather that storm — so thousands of users are selling out of these positions.
Commodities have been having a moment
We talked in past editions about the rush to commodity-associated stocks and ETFs. For a hot sec, it was coal — but as now it’s silver and gold. As the price of these two precious metals have increased, so have the holdings in ETFs like $GLD and $SLV (pictured below).
Not to discredit gold’s big strides this year, but over the two months — silver has had an especially wild ride in the last two months. $SLV, iShare’s ETF for silver holdings, has ran up 39.24% since July 1, and that’s after it fell 11% at the start of this trading week. This month, $SLV added 20,537 new positions; $GLD added 14,855. Over the same period of time, oil products—our former shining star—have mostly taken an L. $USO was dumped by 13,094 in the month behind us. So was the leveraged equivalent, UCO. This comes even as oil prices — and these products — continue to appreciate. It begs the question: are people taking profit or are they moving on?
A lasting note before we move to the big think
Thank you to everyone who has supported the Robintrack newsletter in this form up to this point — it has been an honour to cover some of these trends, even if some of them are monotonous. It’s my desire you’ll stick around to read some big bites we’re going to focus on next. We’ve been limited by the original purview of this newsletter: social trading. Though this is cool, it will live on in a limited capacity as we talk about price action and interesting stories — not just in public markets, but in cryptocurrency, venture capital, and private equity. Every once in awhile, we might even run into discussions that abridge the politics and dynamics of industry and the economy at large. I think we’ll have a lot to share, and we’d appreciate your continued support.
That said, that’s a wrap on this digest. Enjoy the rest of your week, take care and see you soon!
The Robintrack newsletter has been a weekly digest produced for informational purposes only. It is not intended to serve as investment advice. The digest is produced with the intent to provide a data-centric analysis of how digital communities, millennials, and Gen Zers are trading stocks. Robintrack is not affiliated with Robinhood in any way, but all popularity data has been sourced from Robinhood directly via a public API.