Shares of Reddit and Robinhood saw significant increases on Monday as retail trading made a comeback. Reddit’s stock rose 8.7%, reaching its highest level since March, while Robinhood’s stock climbed 4%, recovering some of its losses from the previous week. The surge in these stocks was fueled by GameStop’s 74% increase following the return of famous retail trader “Roaring Kitty,” also known as Keith Gill, who made a comeback on social media.
The resurgence of retail trading frenzy could potentially benefit both Reddit and Robinhood. Reddit’s WallStreetBets chatroom was highly active during the meme stock phenomenon of 2021, and increased retail trading activity could lead to higher revenue for Robinhood. According to Citizens JMP equity research analyst Andrew Boone, while there may not have been a fundamental reason for the rally in Reddit’s stock on Monday, increased user activity could boost the company’s advertising business. More users mean more impressions, allowing Reddit to sell more ads.
In addition to advertising revenue, Reddit may be able to monetize its large user base through data sales and a developer platform in the future. Both Reddit and Robinhood were not publicly traded during the peak of the meme stock rally in 2021. Robinhood had its IPO in July 2021, while Reddit went public in March of this year. Despite not being public at the time, both companies are now seeing the benefits of increased retail trading activity and the potential for further growth in the future.
The return of “Roaring Kitty” on social media has sparked renewed interest in meme stocks and retail trading, leading to the surge in Reddit and Robinhood’s stock prices. Investors are closely watching the movements in these stocks as they gauge the potential impact of retail trading on the market. While the rally on Monday may not have a clear fundamental reason, the increased user activity on Reddit could lead to higher revenue through advertising. Investors are optimistic about the potential for both companies to capitalize on the resurgence of retail trading.
Overall, the sharp increase in Reddit and Robinhood’s stock prices on Monday can be attributed to the return of retail trading and the renewed interest in meme stocks. Both companies stand to benefit from increased user activity and potential monetization of their user base through various revenue streams in the future. Investors are closely monitoring these developments and the impact of retail trading on the market, as the meme stock phenomenon continues to capture the attention of the investing community.
