2 Robinhood Shares Millionaires Purchase – Motley Idiot

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Robinhood has drawn a generation of young investors, and it’s easy to see why. The platform offers a colorful user interface, support for cryptocurrency, and a wealth of educational materials for beginners.

Given their age, the media often portray Robinhood traders as naïve. But some of the hottest stocks on the platform could actually be smart long-term investments. For example, Airbnb (NASDAQ: ABNB) and square (NYSE: SQ) are currently among the most commonly held stocks on Robinhood.

In addition, multi-million dollar asset managers like Larry Fink and Cathie Wood are also buying shares in these disruptive companies. Investors should know that.

Luxurious accommodation with a wooden style room overlooking the ocean.

Image source: Airbnb

Airbnb

In the first quarter, Larry Fink’s BlackRock added 1.2 million Airbnb shares for a total of 2.8 million. Although this position accounts for less than 1% of the portfolio, the purchase decision still makes sense, especially given the state of the travel industry. But this step actually makes sense.

Airbnb’s platform connects potential guests with 4 million hosts – both individuals and professional property managers – in over 100,000 cities. This helps hosts monetize guest rooms, vacation homes, and even tree houses, while allowing travelers to find accommodations and experiences around the world at the same time.

Airbnb’s unique business model has turned the industry upside down. In fact, with a market cap of $ 93 billion, it’s more than Hilton, Marriot, and Hyatt combined. Before the pandemic, the company also grew much faster than these competitors.

Revenue (Billion US Dollars)

2017

2019

change

Airbnb

$ 2.6

$ 3.7

42%

Hilton

$ 8.1

$ 9.5

16%

Hyatt

$ 4.5

$ 5.0

13%

Marriott

$ 20.5

$ 21.0

3%

Data source: SEC filings from Airbnb, Hilton, Marriott, and Hyatt.

Airbnb’s revenue fell 30% in 2020 – yet the business proved to be more resilient than large hotel chains. Hilton, Hyatt and Marriott saw sales declines 54%, 59% and 50% respectively over the past year.

Plus, the future looks a little brighter. In the first quarter of 2021, Airbnb had revenue of $ 887 million, up 5% from a year earlier. But the standout number was the gross posting value. That metric rose 52% to $ 10.3 billion, suggesting strong demand for the quarters to come.

As a final thought, Airbnb’s ability to help guests book unique spaces is a major asset. Travelers can stay in a vacation home on the beach, a rustic villa in the country, or an apartment in the heart of a big city – no chain can offer that kind of privacy or an all-inclusive experience. So I’m not surprised that BlackRock is buying this stock.

square

During the first quarter, Cathie Wood’s Ark Invest bought 3.9 million shares of Square, bringing its total position to 11 million shares. Square is now Ark’s third largest holding, accounting for nearly 5% of its portfolio.

Person using a smartphone to make a payment at a Square registration.

Image source: square

Chances are you’ve seen Square hardware – the sleek tablets and chip readers often used by small businesses – but that just scratches the surface. Square’s platform is an end-to-end commerce solution for sellers of all sizes, covering everything from payment processing to inventory management to payroll and financing.

In the first quarter, Square continued to expand its ecosystem with the introduction of Square Messages. This service enables sellers to chat directly with buyers and help them build lasting relationships.

In particular, Square’s ongoing innovation also brings larger companies to its platform. Medium-sized retailers’ gross payment volume (GPV) rose 43% in the first quarter, growing more than twice as fast as total GPV. Midsize retailers (i.e., those with annual sales above $ 500,000) now make up 30% of Square’s total GPV, up from 24% in 2019.

But the real story in the first quarter was Cash App: gross profit rose 171% to $ 495 million, fueled by heavy consumer engagement with Square Cash Card and Bitcoin. In addition, a new integration with Square Loyalty – a product that helps sellers launch rewards programs – should further increase the Cash app’s engagement in the coming quarters while also providing sellers with another tool to build relationships with buyers.

Despite the significant headwinds caused by the pandemic, Square has grown at a rapid pace in recent years.

Metric

2017

Q1 2021 (TTM)

CAGR

Gross income

$ 839.3 million

$ 3.2 billion

50%

Data source: Square SEC filings. CAGR = average annual growth rate.

Payments processing is a highly fragmented industry, but Square’s end-to-end ecosystem removes much of that complexity and helps sellers manage their business across physical and digital locations.

Cathie Wood tends to focus on innovative and disruptive technology, and Square certainly fits that description. So I’m not surprised that Ark is buying this fintech stock.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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