Q1 2021 was anything but status quo: Our analysis of the top 100 stocks owned by millions of investors on the Apex Clearing platform showed several new themes gained significant traction with younger investors. Here, we explore how different generations participated—or didn’t—in the latest trends, including meme stocks, penny shares and crypto-related investments.

 

Younger investors send meme stocks to the moon

Fueled by a surge in retail trading and social media hype—particularly on Reddit’s WallStreetBets forum—meme stocks made a splashy debut with younger investors in Q1.

GameStop was at the center of it all. The old-school video game retailer was heavily shorted by hedge funds betting against the company before Redditors banded together and took shares on a volatile ride. Gen Z burst into the world of investing and showed their online savvy, driving (previously unraked) GameStop all the way to #4. Millennials also strongly supported GameStop, adding it to their top 100 at #5. Gen X was a bit less enthusiastic, adding it at #22, while Boomers kept it out of their top 100 altogether.

Movie theater chain AMC Entertainment was another flagship meme stock. Before garnering attention on WallStreetBets, bankruptcy was on the table for the company as it struggled to stay afloat during the pandemic. After shares climbed more than 400% over a 72-hour period, AMC was able to raise hundreds of millions of dollars from the stock market and significantly cut its debt load. Experts say AMC’s story is evidence of a new force in financial markets: The collective power of small-time individual investors to influence a company’s fate.[1]

Gen Z and Millennial investors were the most optimistic about AMC, adding it to their top 100 at #6 and #7, respectively. Once again, Gen X was slightly less supportive than the youngest investors, ranking AMC #12. Boomers chose to dip a toe in, with the shares joining their top 100 at #74.

Finnish telecom equipment maker, Nokia was another headline meme stock. It received lukewarm backing from Gen Z, Millennials and Gen X, ranking #60, #72 and #82, respectively, but didn’t make the top 100 list for Boomers.

 

Picking up popular penny shares

Meme stocks weren’t the only market segment to surf the growing wave of retail trading and influence of online communities: Trading also boomed in so-called penny stocks—shares which trade for less than $5 apiece. In February 2021, there were 1.9 trillion transactions in over-the-counter markets, where penny stocks trade, an increase of more than 2,000% from a year earlier.[2]

In terms of social media excitement or investor inflows, it doesn’t take much to spark a big jump in these thinly traded, low-priced shares—a dynamic which seems to appeal to younger investors. Plus, much like fractional shares, penny stocks offer an enticing entry point for investors who may not have large account balances.

Many of the new entrants in the top 100 in Q1 were priced below $5 at the start of the quarter, including veterinary health company Zomedica. Shares enjoyed an eye-popping run during the quarter, climbing from $0.23 on December 31, 2020 to $1.58 on March 31, 2021, an increase of 587%.

As with the meme stocks highlighted above, younger investors were more engaged in the penny shares of Zomedica than older investors. It vaulted onto the Gen Z top 100 at #19 and joined Millennials’ list at #22. Gen X added enough shares for Zomedica to rank #43, while Boomers kept it out of their top 100.

Similarly, shipping company Castor Maritime jumped onto the Gen Z rankings at #36 and the Millennial top 100 at #39. The small Cyprus-based firm’s share price started the year at $0.19 and finished the quarter at $0.76, an increase of 300%. Castor Maritime squeaked onto the Gen X top 100 at #90 but failed to make the cut for Boomers.

 

Seeing the potential in crypto

Younger investors also embraced the growing appeal of cryptocurrency-related investments—and in this instance, Boomers did, too, albeit to a lesser degree. Previously unranked Marathon Digital Holdings, a company that mines cryptocurrencies, joined the top 100 for Gen Z, Millennials and Gen X at #25, #32 and #52, respectively. Boomers jumped on the bandwagon by welcoming it to their top 100 at #96.

Fellow mining company Riot Blockchain followed a similar trajectory, joining each generation’s list in Q1. Gen Z ranked its shares the highest at #38 with Boomers going the lowest at #82. Lastly, Chinese mining company SOS—which also has some cachet as a meme stock—appeared in the rankings only for Gen Z and Millennials.

 

[1] https://www.wsj.com/articles/how-reddit-renegades-helped-theater-giant-amc-avoid-a-tragic-ending-11614358803

[2] https://www.nytimes.com/2021/03/18/business/dealbook/penny-stocks-mania.html

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