You've got to hand it to Robinhood investors. They're not letting an ugly start to the year for the S&P 500 totally scare them away from all their favorite stocks.
Robinhood investors continue to maintain high conviction in 10 stocks, including Tesla, Apple and AMC, based on the just-released Robinhood Investor Index. High ownership remains in these stocks, even as all 10 of them are down this year and all but three are underperforming the S&P 500, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
"Over the last several years, we've seen our customers become a powerful force in the markets and usher in a new era for Wall Street," Robinhood said in its Investor Index. "With this has come a lot of speculation about our customers' portfolios. Today, we're unveiling the Robinhood Investor Index to show how our customers are investing."
Rough Year For Robinhood Investors
It's been a tough 2022 for most investors, including Robinhood investors.
The Robinhood Investor Index peaked in May 2021, and has been sinking ever since. And the pain has gotten worse still this year. The index is down more than 20% just this year, largely in line with the drop of the Nasdaq composite Index.
But Robinhood investors are staying the course, at least with the 10 stocks they have the most conviction in.
Robinhood Investors Load Up With Tesla
It's not all that surprising given its popularity with Gen Z investors, but Tesla is the top holding with Robinhood investors, too.
But it's not been a smooth ride, this year. Shares of Tesla are down 24.7% this year to 265.25. Analysts, too, are at least not bearish on the stock. They'll calling for the stock to be worth 308.32 a share in 12 months time. And if that's right, it would be a roughly 16% gain. Much hinges on profitability this year. Analysts think the company's profit should rise 85% this year.
Believing In S&P 500 Big Tech
Robinhood investors are famous for owning speculative stocks. But that's not entirely the case.
More than 75% of the Robinhood Investor Index is wrapped up with large cap stocks, including many in the S&P 500. And the largest sector in the index is information technology.
So it's not surprising to see Apple and Microsoft as large holdings. Apple is the No. 2 largest position in the Robinhood index. Apple is starting to hurt investors like Warren Buffett this year, dipping 22%. But keeping conviction high is tougher on owners of Microsoft stock. Shares are down 31% this year. And yet, Microsoft is also a top buy position for many large institutional investors.
Hanging In With Meme Stocks
Robinhood investors' nerves of steel are most clear with AMC and GameStop. Shares of these unprofitable companies are down more than 80% and 50% from their 52-week highs, respectively. Just this year, theater chain AMC is off 74% while video-game seller GameStop is down 32%.
And still, both stocks remain highly weighted in Robinhood portfolios. How long investors can take the pain, though, remains to be seen.
Most Popular Stocks With Robinhood Investors
Showing most conviction in Robinhood Investor Index, but all are down this year
| Company | Symbol | YTD % change | Sector |
|---|---|---|---|
| Tesla | -24.7% | Consumer Discretionary | |
| Apple | -22.1 | Information Technology | |
| Ford Motor | -46.1 | Consumer Discretionary | |
| Amazon.com | -32.2 | Consumer Discretionary | |
| AMC Entertainment Holding | -74.4 | Communication Services | |
| Microsoft | -30.7 | Information Technology | |
| NIO | -50.2 | Consumer Discretionary | |
| Walt Disney | -39.1 | Communication Services | |
| AMC Entertainment Preferred | -4.5 | Consumer Discretionary | |
| GameStop | -21.2 | Consumer Discretionary |
Sources: IBD, S&P Global Market Intelligence, Robinhood
Follow Matt Krantz on Twitter @mattkrantz
