The 50 Best Robinhood Actions in July

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Although volatility has eased in recent weeks, investors have taken a crash course in showing patience over the past 17 months. Despite the wide base S&P 500 losing 34% of its value in about a month during the first quarter of 2020, we saw the benchmark catapult to more than 90% of its lows.

For some investors, volatility is something they fear. But for predominantly young and novice retail investors, volatility is the impetus that drove them to invest their money in the stock market.

Image source: Getty Images.

As volatility rocked the market, these young retail investors have found their place with the Robinhood online investing app. We know this because Robinhood added around 3 million new users in 2020.

There are a number of lures for retail investors with Robinhood. For example, Robinhood does not charge a commission when stocks listed on the New York Stock Exchange or Nasdaq exchange are bought or sold. Robinhood is also one of the many brokerages that allow you to invest in fractional shares. And who can forget that Robinhood also offers free actions to new users.

On the one hand, it’s fantastic to see young people putting their money to work. Time is investors’ greatest ally. The sooner they start putting their money to work, the better their chances of building up their nest egg.

On the other hand, Robinhood’s retail investors bought some really horrible stocks. Instead of thinking long term, their buying activity demonstrates a willingness to hunt for momentum coins, penny stocks and money losing companies.

If you don’t believe me, here’s a look at the 50 most owned Robinhood stocks as of July dawn.

Company Company
1. Tesla Motors (NASDAQ: TSLA) 26. Break
2. Apple 27. Ali Baba
3. AMC Entertainment (NYSE: AMC) 28. Bank of America
4. Producers of sundials (NASDAQ: SNDL) 29. OrganiGram Holdings
5. Ford engine 30. Global Coinbase
6. General Electric 31. Tilray
7. NIO 32. Facebook
8. Walt disney 33. Canopy growth
9. Microsoft 34. Advanced micro-systems
ten. Amazon 35. Starbucks
11. American Airlines Group (NASDAQ: AAL) 36. Twitter
12. Connect the power 37. AT&T
13. Nokia 38. Moderna
14. Carnival 39. NVIDIA
15. Aurora Cannabis (NASDAQ: ACB) 40. Fuel cell energy
16. Pfizer 41. Vanguard S&P 500 ETF
17. Zomedica 42. Coca Cola
18. Go Pro 43. Norwegian Cruise Line (NYSE: NCLH)
19. Group of nude marks 44. Ideal
20. Palantir Technologies 45. Workaholic group
21. GameStop (NYSE: GME) 46. SPDR S&P 500 ETF
22. Delta Airlines 47. Galactic Virgo
23. Blackberry 48. General Motors
24. Capital of Churchill 49. Zynga
25. Netflix 50. United Airlines

Data source: Robinhood, as of June 26, 2021. Table by author.

Continue to hunt memes stocks

Like bees for honey, retail investors have been inseparable from memes stocks for nearly six months. An action meme is a business valued more for its favor / hype than for its operational performance.

Since mid-January, retail investors have banded together to buy stocks and out-of-the-money call options on stocks with high short-term interest rates. In many cases, companies with high short-term interest rates have poorly performing businesses. This is how we saw GameStop and AMC Entertainment become extremely popular on Robinhood.

The good news for GameStop is that it was able to use its monumental run to sell common stocks and raise capital. It has completely written off its debt and provided itself with enough cash flow to oversee its ongoing transformation into a digital games company. To be clear, that doesn’t negate the fact that the former GameStop management team has completely ditched the switch to digital gaming. What it does is give the business enough capital to at least attempt a transformation.

The same cannot be said of AMC, which sold the vast majority of its shares six months ago to avoid bankruptcy. Even with a handful of recent capital increases, AMC has net debt of over $ 3 billion, and its 2027 bond prices indicate the company is still at risk of bankruptcy.

To make matters worse, movie ticket sales have been on the decline for 19 years. Even with a larger share of the movie industry, AMC’s pie is shrinking. It’s pretty clear that hype, ignorance of fundamentals, and misinformation are the main drivers of AMC’s irrational rally.

A cannabis bud and a small vial of cannabinoid oil next to a Canadian flag.

Image source: Getty Images.

cannabis frenzy in Canada

Robinhood’s retail investors also have a crush on Canadian marijuana stocks. Five of the 33 most owned companies in Robinhood’s ranking are from our neighbor to the north.

Even though cannabis-focused research firm BDSA has forecast cannabis sales in Canada to grow from $ 2.6 billion in 2020 to $ 6.4 billion by 2026, the Canadian pot industry has been a desaster. Regulators have caused all kinds of supply chain problems, consumers have flocked to low-margin brands, and Canadian marijuana inventories have grown too zealously and in some cases have decimated their balance sheets over the course of time. of the process.

The fascination of Robinhood investors with sundial producers is simply frustrating. It may well be the most preventable stockpile of marijuana. Although his management team was able to repay the company’s existing debt by issuing stock and performing debt-for-stock swaps, these stock offerings just haven’t stopped. In just over seven months, over 1.35 billion shares were issued. Sundial shows no consideration for its shareholders and its management team has not even made a concrete plan for how it will spend its money.

We have seen similar issues with Aurora Cannabis, the second most popular cannabis strain in Canada. Once the most owned share in Robinhood, Aurora has drowned its shareholders in dilution. Even after selling one of his greenhouses and shutting down a number of other grow operations, his reduction in costs put him far from making a profit. As long as Aurora continues to spend money, its management team will continue to issue shares.

An American Airlines commercial plane outside a terminal gate.

Image source: American Airlines.

An obsession with travel agencies

Another absolute headache is Robinhood’s investor obsession with travel agencies – especially airlines and cruise ship operators.

On the one hand, it could be argued that the coronavirus pandemic has punished the travel industry too much. While we remain firmly in a global pandemic, rising national immunization rates give hope that the United States may soon put the pandemic in the rearview mirror. For example, the Transportation Security Administration screened more than 2 million passengers in a single day in mid-June for the first time since before the pandemic was declared.

On the flip side, the travel industry tends to be built on mediocre margins at best, and it typically requires the economy to run at full speed. Although they have recovered from a recession, most airline stocks now carry billions of additional debt that they did not have two years ago. American Airlines, which I previously called the worst airline stock, has $ 34 billion in net debt and $ 48 billion in overall debt. The interest that American Airlines will have to pay to service this debt could cripple its growth initiatives for the next decade.

Meanwhile, companies like Norwegian Cruise Line have come close to bankruptcy during the pandemic. Unlike airlines, which are essential for business travel, cruise ships are not essential. They will remain at the mercy of the pandemic until it is firmly in the rearview mirror. This means that Norwegian could continue to lose money until 2022 or even beyond.

A Tesla Model S plugged into an electrical outlet.

A Tesla Model S plugged in for charging. Image source: Tesla.

Focus on alternative energies for cars

Finally, Robinhood investors seem to be getting into everything to do with alternative / clean energy for vehicles.

Electric vehicle (EV) hub Tesla has overtaken Apple to become the most held stock on the platform, while Ford, General Motors, Workhorse Group, NIO and Churchill Capital are other electric vehicle producers who have found their place in the top 50 of the ranking (GM and Ford currently produce mainly combustion engine vehicles). If we also include Plug Power, FuelCell Energy, and Ideanomics, these are nine of Robinhood’s top 48 titles that focus on the adoption of alternative energy for automobiles.

There is virtually no doubt at this point that electric vehicles and potentially hydrogen fuel cells represent the future of the automotive industry. There is a decades-long opportunity for consumers and corporate fleets to switch to alternative solutions, as well as for ancillary actors to build the infrastructure necessary to support electric vehicles and fuel cell vehicles at hydrogen.

The problem is, investors tend to overestimate how quickly new technologies are adopted, and that’s probably what we’re seeing with electric vehicles. The fact that Tesla is worth $ 647 billion is ludicrous given that it hasn’t demonstrated that it can make a profit by selling its electric vehicles. The only way Tesla has been able to make a profit is to sell renewable energy credits or take a one-time profit from the sale of Bitcoin.

The electric vehicle space is increasingly crowded, and major auto stocks are investing tens of billions in new models. Tesla is unlikely to be able to maintain its competitive edge any longer.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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