[Editor’s Note: This is an article by Devin Partida, the Editor-in-Chief of ReHack.com. Devin is a Fintech and crypto writer whose work has been featured on industry publications such as FinTech News, Due, the Swissborg blog and FinTech Insight.]
Stock trading apps are one of the outlying success stories to emerge amid the COVID-19 pandemic. Despite widespread economic uncertainty, throngs of new investors rushed to these services to start buying stocks and cryptocurrencies. The appeal of these apps during the pandemic is easy to see.
As stock prices fell, the simplicity and gamification of trading apps like Robinhood attracted a new class of investors. Fee-free transactions and the availability of fractional stocks gave cash-strapped customers the confidence to start trading. As a result, Robinhood gained 3 million users in the first four months of 2020, and its average daily users surpassed 4 million in June. In his February written testimony to Congress CEO Vlad Tenev said the company had 13 million customers.
These apps may not populate headlines as frequently as a few months ago, but they remain extremely popular. As vaccines continue rolling out and economies reopen, though, will investors continue to trade as much?
The Post-Pandemic Economy Could Encourage Trading
The recovering economy might fuel stock trading apps instead of hindering them. While low stock prices encouraged their initial adoption, positive returns and increasing disposable income could sustain them. Users with renewed financial security may look to buy more stocks, and they will likely use vectors they’re already familiar with.
Users likely won’t see meteoric gains as they did in the GameStop short squeeze, but they with the economy booming they could continue to see positive returns on stocks. These rewards will encourage higher engagement on the apps investors used to purchase the stocks initially.
Then there is the whole cryptocurrency boom. Many of these stock trading apps also offer crypto trading with an ease of use similar to stock trading. Such easy accessibility has likely contributed to the boom in crypto these past few months.
As investors’ peers see their success, it could encourage more first-time users to download these apps. Since consumers will likely be busier than they were during the pandemic, adoption won’t skyrocket as it did in 2020. Still, it could continue to grow, even if at a slower pace.