Friday March 19, 2021
Hurray, cash from the state is here
Neo broker Robinhood is on the hunt for customers
Millions of US citizens are receiving their new $ 1,400 corona checks these days. The criticized online broker Robinhood feels the moment is right and lures customers with a bonus if they deposit money to invest in stocks. He himself sees no connection.
The US neo-broker Robinhood is aggressively targeting customers in its home country. Retail investors who deposit money in the next two weeks to later invest in stocks will receive an extra $ 10 credit for their deposit of between $ 200 and $ 999. Customers who bring in at least $ 15,000 of new stake, $ 250. All users who successfully top up their account between March 15 and 28, 2021 and keep their credit until at least April 4, 2021, are entitled to participate, according to the website. The timing for the "Robinhood Cash Reward" marketing campaign is a good one.
Because millions of taxpayers in the US are receiving their corona checks for $ 1,400 these days. A considerable part of the previous rounds of free money was invested in the stock market. The stock market is booming and access to trading has become much easier thanks to new apps without complex fees or complicated user interfaces. Crowds of small investors with little money are now investing in stocks and ETFs – without major controls and hurdles.
However, critics are concerned about the recruitment campaign for fresh funds. The trading platform was only recently exposed to significant allegations. After the turmoil on the stock exchange around Gamestop, Robinhood was accused of making it too easy for small investors to make especially risky transactions. The online broker is charged with numerous violations of trading regulations. The company wants to make a comparison out of allegations by some US authorities. The criticism that the online broker promotes gambling culminated in an explosive legal dispute with the family of a customer who had committed suicide in June 2020 at the age of only 20 under the – false – assumption that he was making enormous trading losses with stock options.
In February, co-founder Vlad Tenev was conspicuously meek when polled in US Congress about the company's business model and the role it plays for more than 13 million retail investors, many of whom are young and new to the stock market. It didn't change anything. On the contrary. In the face of ever new highs, there is a gold rush atmosphere. More and more investors are trying to surf the stock market wave and find their luck on the stock market.
Corona aid lubricates the stock market
Surveys in the USA have shown that only about 30 to 40 percent of corona aid – as requested by the US government – is used for consumption. A similar amount is invested in the stock market, according to Vanda Research. From Biden's aid package that is expected to be three billion dollars, the "Financial Times" quotes from the surveys of the data analyst, who specializes primarily in the behavior of amateur investors.
Robinhood has already benefited significantly from this investment boom in the two previous free money rounds that Washington sent its taxpayers by mail. After the second check in December, customer deposits on the trading platform rose by seven percent. According to a survey by Deutsche Bank, the proportion of younger investors under the age of 34 was particularly high. At the time, two-thirds of them said they used their stimulus checks to buy stocks.
In its most recent newsletter, the Neo-Broker explicitly addressed the glut of customers' money – with wise foresight -: "The stimulus has landed," headlines Robinhood. Nevertheless, a company spokeswoman told the Bloomberg finance agency that there was a connection with the US government's economic stimulus program. Robinhood carries out such activities on a regular basis, explains the spokeswoman. When asked how often there were such bait offers, they did not want to provide any information, it is said.
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