Who is Gen Z and how are they investing? Analysis of our [proprietary] Q1 data

In the coming decades, a massive amount of wealth is poised to be transferred from Boomers and the Silent Generation to younger age groups, including Gen Z. In addition, Gen Z has the fastest-growing income, expected to increase 140% in the next five years and overtake Millennials’ total income by the early 2030s.[1] As the Gen Z cohort breaks into adulthood, the financial services industry is starting to ask, “Who is Gen Z and how are they investing?”

As a partner for the industry’s leading online investing platforms, Apex has an unprecedented view into the industry’s changing landscape. At the close of each quarter, we analyze the top 100 stocks owned by millions of investors on the Apex Clearing platform. Here we use that analysis to explore two key themes beginning to emerge for Gen Z investors.

Getting to know Gen Z: Quick facts

Gen Z encompasses young adults born between 1996 and 2016, many of whom are now entering their early 20s. According to a report by BofA, they’ve never known life without Google, 40% prefer hanging out with friends virtually vs. real life, they’ll spend about six years of their life on social media and they aren’t likely to rely on credit cards.[2]

Online brokerages are seeing high levels of engagement and new account openings from Gen Z, who trust their digital savvy to navigate social media platforms like YouTube and Reddit for investment research, advice and idea generation. The pandemic has been an important accelerant, with experts suggesting many young investors jumped into markets during stay-at-home orders because they had more free time to research and trade stocks. Across all age groups, the growing wave of retail investors has been boosted by the rise of zero-commission trading, more flexible margin requirements and tech advancements designed to remove friction from the investment experience.

Youngest investors are willing to try something new

When we look at how many of Gen Z’s top 25 holdings in Q1 2021 were unranked the previous quarter, we count 5 names. Expanding to the top 50, there are 13 new names. This tells us younger investors are willing to embrace new investment ideas—and they’re willing to put some relative punching power behind them, as new additions aren’t relegated to the bottom rankings. In fact, 3 of the top 10 holdings were new additions.  

How does this compare to other generations? Millennials show a fairly similar pattern, adding 5 new names to their top 25 and 9 new holdings to their top 50. When we compare Gen Z to Boomers, though, we see a stark difference: Boomers had precisely zero new additions to their top 50.

So, what trends are Gen Z investors embracing? Meme stocks, for one. Video game retailer GameStop and movie theater chain AMC Entertainment joined the list in Q1 at #4 and #6, respectively. Sports-focused streaming service FuboTV (#39) is also known as a meme stock.

Similarly, Gen Z was willing to trade penny stocks, i.e., shares priced at less than $5 apiece. Much like meme stocks, penny stocks are often thinly traded and can get a big boost from online hype. Notable new joiners in Q1 included veterinary health company Zomedica (#19), nanoscale genomic imaging firm Bionano Genomics (#27) and shipping company Castor Maritime (#36).

Gen Z also warmed up quickly to SPACs, or special purpose acquisition companies, such as Churchill Capital IV—a previously unranked holding that vaulted into the top 10. In February 2021, luxury electric vehicle company Lucid Motors announced it would go public by merging with Churchill Capital IV.

Lastly, Gen Z investors added multiple cryptocurrency-related investments to their top holdings in Q1, including crypto mining companies Marathon Digital (#25), SOS (#31) and Riot Blockchain (#38).

Blue-chip names show steady, cross-generational appeal

Although Gen Z is willing to embrace new investment trends—arguably more so than other generations—several of its top names are of the big, blue-chip variety and have been holding steady. For example, the Gen Z top 3 remained unchanged quarter-over-quarter, with Tesla (#1), Apple (#2) and Amazon (#3). Also holding steady in the top 10 were NIO, Disney and Microsoft. These names rank quite highly for Millennials, Gen X and Boomers, illustrating their universal appeal.

[1] “Ok Zoomer: Gen Z Primer,” BofA Global Research, December 1, 2020

[2] “Ok Zoomer: Gen Z Primer,” BofA Global Research, December 1, 2020