The brokerage app Robinhood has become a magnet for budding investors keen on taking advantage of its commission-free trading, embracing of digital currencies, and a vast pool of financial intelligence.
The app has soared to first place in the App Store and has achieved a remarkable valuation of $30 billion during its latest round of funding, while its user base expanded by 3 million last year. Most users are under 30, indicating a young and potentially less experienced demographic.
Yet, there is substantial learning potential here, especially concerning several stocks that are not only trending but may very well be prudent long-term investment selections. Seasoned market players, the likes of Larry Fink and Cathie Wood, would agree.
Among the array of options, two buzzy names stand out on Robinhood: Airbnb and Square, both of which are considered wise choices for the long haul.
To better understand these companies and assess whether they’re a good match for your investment strategy, let’s delve a bit deeper.
Airbnb
BlackRock’s Larry Fink’s confidence in Airbnb is apparent, as evidenced by an increase in BlackRock’s holdings by 1.2 million shares in the last quarter, summing up to 2.8 million shares. This is quite an endorsement given the tourism sector’s recent challenges.
Airbnb sits at the nexus of guests and an extensive network of 4 million homeowners and professional rental managers across more than 100,000 cities worldwide. Its app has afforded countless individuals the opportunity to cash in on vacant spaces or secondary properties, benefiting many with alternative income streams.
With a revolutionary strategy, Airbnb has thoroughly shaken up the lodging industry, boasting a market valuation of $93 billion – more than the combined worth of hotel giants such as Hilton, Marriott, and Hyatt.
The adversities of 2020 prompted a 30 percent contraction in Airbnb’s revenue, which still outperformed the sector average loss of 55 percent by prominent hotel chains.
However, the outlook is improving. The early months of 2021 have shown a revival for Airbnb, with reported revenues of $887 million, a promising 5 percent increase year-over-year. The gross booking value soared by 52 percent to $10.3 billion, indicating robust demand projections.
The strength of Airbnb lies in its diversity of accommodation offerings, ranging from luxury villas in Greece, trendy lofts in London, to quaint dwellings in rural India, all at varying price points and delivering unique experiences.
This variety of immersive lodgings is something traditional hotel chains simply cannot match, making Blackrock’s investment strategy in Airbnb all the more clear.
Square
Cathie Wood’s Ark Invest has also made a notable move by adding 3.9 million Square shares in the early part of the year, escalating its total stake to 11 million shares. With Square now being Ark’s third-largest portfolio asset, it makes up nearly 5% of its total holdings.
Square offers a comprehensive financial ecosystem that spans from payment processing to inventory management, along with payroll and financing solutions – fully integrating the commercial operations spectrum.
With the newly introduced Square Messages this quarter, sellers can now directly communicate with buyers, fostering stronger business-customer rapport.
While Square has traditionally been a favorite among smaller enterprises, it is making headway with larger business entities, consistently innovating to appeal to a broader spectrum of commercial clients.
This quarter saw a substantial climb in the mid-market merchant payment volume by 43 percent, with such merchants now contributing to 30 percent of Square’s overall volume.
Boosting revenue even further is Square’s Cash Card. The burgeoning profit of $495 million, a surge of 171 percent, is a testament to the potent buyer engagement on the platform, propelled by a compelling loyalty program that allows sellers to grant reward points to consumers, augmenting customer loyalty significantly.
Despite the pandemic’s disruptions, Square has illustrated resilience and entrepreneurial agility by enhancing its payment ecosystem’s cohesion.
In contrast, Robinhood itself has made headlines with its rise in popularity among retail investors, particularly during the GameStop saga, and has filed in secrecy for an IPO earlier in March 2021. The details remain undisclosed. The brokerage saw a halt in operations due to unprecedented trade volumes and sought extra funding from its investors to satisfy capital demands.
