Robinhood (HOOD.US) is trying to move WSB forums into its own app! I want to create a gathering place for new retail investors through my own platform

The Zhitong Finance App learned that retail investors from Robinhood Markets Inc. (HOOD.US), an “influencer brokerage firm” all over the US, will not have to leave the Robinhood investment platform to show off their holdings or post provocative emoticons on other social media platforms to celebrate the victory of their investment strategies, because this online brokerage firm is entering social media platforms and striving to create a focus for retail investors like WallBets Street, the most famous sub-forum on the social platform Reddit platform.

According to information, the company said in a statement on Tuesday that it will invite a small number of customers to join its own social networking platform “Robinhood Social” at the beginning of next year, and then expand the scope of opening the platform. In the early stages of operation of this social media platform, all traders' posts were required to be accompanied by a stock, option, or other asset transaction. These position data will be allowed to continue to be updated in real time after being shared by retail investors, and comments on posts will also be allowed.

“We've always thought this was an area we wanted to get further into, especially as socializing and investing on a global scale are becoming more and more closely connected.” Abhishek Fatehpuria, Robinhood's vice president of product management, said in an interview.

Investors will also be able to follow the operations and statistics of other high-star investors with significant investment influence added by the platform to Robinhood Social, including their one-year and intraday profit and loss and profit margins. Profiles of public figures will also appear on the social media platform, such as former US House Speaker Nancy Pelosi and Bill Ackman, a billionaire hedge fund manager from Wall Street. Their trading rules will be filled into the social platform through public disclosure required by US law.

Back to the original vision

In a sense, it was an initial starting point for returning to the company. Vlad Tenev, co-founders of Robinhood, and Baiju Bhatt co-conceived a networked community for sharing investment information before it was officially launched as a favorite trading platform for retail investors all over the US. From the beginning to the end, Robinhood's retail investors were more active on social media than customers on other brokerage platforms, and they included screenshots and reviews to compare their trading strategies.

No time has there been a better time to reflect Robinhood's strong sense of community than during the toughest phase of the COVID-19 pandemic, when novice investors flocked to Reddit's WallStreetBets forum. Robinhood now hopes to capitalize on and take on the continued enthusiasm of retail investors for investment and markets within its own ecosystem.

“While Robinhood customers are unlikely to abandon their existing accounts on other social media platforms, Robinhood Social does offer something exclusive and timely that Reddit and other platforms don't have.” Fatehpuria said in an interview.

“How can we use this to upgrade the entire ecosystem of social and social discussions about investing in the stock market and bring credibility to it?” he said. Fatehpuria added that credibility will come from Robinhood Social users knowing that behind every post there are real people trading real stocks or options, rather than modified screenshots that may have been tampered with or posted on external platforms. “These things are only possible on our platform.”

Robinhood also said in an official statement that it is likely that it will go live quickly after initial testing, including private messaging, website or app links, image sharing, and other common social media features.

In addition to social media platforms, the company will also give a wide range of retail investors the ability to directly short stocks, which is generally considered a more advanced investment strategy. Robinhood also said that starting at the beginning of next year, some index options will also offer overnight trading.

RobinHood strives to create a social networking platform similar to WallStreetBets, a gathering place for retail investors

A sharp drop in the threshold (zero commission+mobile brokerage) + a sharp increase in social media stickiness during the COVID-19 pandemic+ high-risk, teaser culture, and retail community mechanism, propelled WallStreetBets (WSB) into the center of US retail traffic and sentiment from 2020 to 2021; while “meme stocks (meme stocks)” events such as GameStop (GameStop) also pushed it from the popularity of the community to mainstream topics among retail investors, and the membership level and market influence of retail investors skyrocketed along with it.

WSB's post emphasizes real trading, real positions, and “loss/profit posting”. Combined with exaggerated plot and bullish narratives such as “YOLO” and “buying on dips,” it is easy to form a flywheel effect from watching, imitating, and participating. Academic research and industry analysis have recorded that increased WSB attention will increase investors' risk tolerance and position aggressiveness.

YOLO — an aggressive group of investors whose investment purpose is “You Only Live Once” (You Only Live Once), they are passionate about betting on a single stock by “gambling” full positions or buying highly leveraged options. Since this year, the “YOLOs” have been particularly obsessed with the AI boom and heavily betting on the most popular AI computing power industry chain companies such as Nvidia, Broadcom, and TSMC along with multiple trends, and are betting that “AI faith” will continue to make waves around the world.

According to statistics, the WSB forum has reached eight digits (tens of millions) of subscribers, and has long been at the top of Reddit in terms of discussion volume and activity, and Robinhood's core plan for some time to come is to rely on a huge retail investor base to create Robinhood's own social networking platform comparable in size to WSB.

Overall, the rise of WSB was no accident: the low transaction cost revolution provided the soil, while the COVID-19 pandemic and the GameStop incident instantly provided a “exit” catalyst; ultimately, it formed a retail supernode that can gather retail investors, price a hot topic, and influence the transaction structure.