5 Giant Bubbles in Popular Robinhood Stocks

Blowing the Global Stocks Bubble?
  • Robinhood stocks are those that are bought in large numbers by small-scale private investors.
  • There has been a strange jump in several such shares recently.
  • There were cases where people only shuffled two titles.
  • Other times they bought what they wanted, but without a reasonable price limit.
  • Do your homework!

Robinhood and money


11+1+1 Errors Robinhood Stocks Investors Make

This year, the number of retail users increased tremendously in the stock market. Allegedly millions of inexperienced, mostly young small investors are streaming into the market. Some weeks ago I made a list about the 11 + 1 Grave Investment Errors Robinhood Newbies May Commit, but one was missing. “You don’t make your homework and choose a mistaken title”. Or, simpler, “you buy the wrong product”.

Everyone makes a mistake. But anyone with less experience or not doing the basic homework is much more often mistaken. Others may invest by intuition without proper analysis. They may choose the product they wanted but at the wrong price. Let’s see the examples.

1st Robinhood Stocks Bubble: Zoom in 2019, and 2020

Zoom video chat

In April 2019, the video-chat software firm Zoom Video Communications Inc. (ticker: ZM) prepared an IPO that valued the company one billion dollars. But another title, the unrelated Zoom Technologies Inc. (ticker: ZOOM) jumped to $5.7 from some cents. “Soared 56,000 percent”–wrote MarketWatch those days. Some weeks after, Zoom Technologies fell below 90 cents.

So far, so good. But some people never learn–or don’t read so much about past events. Because this year happened the same. In March, because of the quarantine and the spreading of home offices, Zoom video-chat and similar apps got very popular. (Read: 29 Zoom Alternatives and the Zoom Stock Price Explosion.) Zoom Video Communications skyrocketed, but the “doppelganger”, Zoom Technologies, jumped even more. To almost $21 from around $2 in February. To avoid more confusion, the trade was suspended in March. Some later, the ticker code of Zoom Technologies Inc. was changed to ZTNO. (Bloomberg.) This Friday, the stock closed by only 54 cents.

Chart 1: Typical Robinhood Stock Bubble? Zoom Technologies Inc. Stock Price.
Chart 1: Typical Robinhood Stock Bubble? Zoom Technologies Inc. Stock Price. (TradingView.com)

2nd Robinhood Stocks Bubble: FANG or Fangdd?

FANG stocks, Internet giants rule the world

Something similar happened with the Fangdd stock (ticker: DUO). It exploded to $115 from 9 to 10 dollars in May and fell to 10 dollars again some weeks later. A perfect cash-burner.

What was the reason for the confusion here? The FAANG stocks are tech-giants, the group includes Facebook, Apple, Amazon, Netflix, and Alphabet’s Google. Earlier, without Apple, the term FANG was used. Today, the FANG+ Index exists and often over-performs the broad stock market. Also FANG+ ETFs (exchange-traded funds) exist. (More here: Will the Big Ones Get Bigger and Bigger? – FANG+ Stocks on the Peak.)

Probably a few small investors read about FANG or FANG+ stocks and confused the giants with a dwarf. With illiquid stocks, even a few buyers are enough to provoke a huge price movement.

Fangdd Network Group Ltd is a company that mainly engaged in providing solutions for real estate brokers through online real estate trading platform SaaS. (Investing.com)

Chart 2: Not a FANG+ Member. Fangdd Network Group Ltd. Stock Price.
Chart 2: Not a FANG+ Member. Fangdd Network Group Ltd. Stock Price. (TradingView.com)

3rd Robinhood Stocks Bubble: Rent-a-Zombie (Hertz)


“Frenzied traders” also piled into bankrupt names in the last weeks. Hertz (ticker: HTZ), the famous rent-a-car company filed for bankruptcy a few weeks ago. Because of the coronavirus “crippled demand for rental cars”. (Source.)

The value of companies in bankruptcy used to fall. So did Hertz stock in May, crashing to $0.5 from $3.0, approximately (red arrow). But later, in a surprising move, the “Robinhood stock” jumped to $5.60, and closed on $1.7. Here, small investors are not mistaken in choosing the stock. But the price can be a problem. “Rent-a-Zombie–Hertz back from the dead”–wrote the Robinhood Snacks podcast.

Chart 3: One of Robinhood Investors’ Preferred Stock. Hertz Global Holdings Stock Price.
Chart 3: One of Robinhood Investors’ Preferred Stock. Hertz Global Holdings Stock Price. (TradingView.com)

I know serious analysts are also debating whether the company can escape bankruptcy. And, whether a higher stock price is justified. (For example, here and here.) But if the crisis drags on, the value of the stocks may decline to zero. For now, some bad news is coming about the epidemic from various U.S. states (Florida, Arizona, California, etc.). The virus is attacking again and again also in Asia.

4th Robinhood Stocks Bubble: Chesapeake Energy

Crude Oil Production

The larger US crude oil and gas company, Chesapeake Energy Corporation (CHK) may not be a “Robinhood Stock”. At least Robintrack data is incomplete. (DOU and ZTNO also seem to be delisted from Robinhood.) But Chesapeake Energy walks in the group of the living dead. (I mean, in the group of stocks of companies in bankruptcy jumping high.) The stock fell huge in April with the crude oil price, later with high chances of bankruptcy. But jumped to $70 from $12 in June. (Intraday, to 77.50.) To crash to $13 again, soon.

Here, the short-covering may have been the reason. “Company admits bankruptcy, soars from $7.77 to $77.50. Shorts were massacred”–wrote TheStreet. The stock jumped before the official–but not unexpected–bankruptcy filing. Then crashed after that. A similar case in the oil industry was the Whiting Petroleum stock (WLL).

Chart 4: Chesapeake Energy Corporation Stock Price.
Chart 4: Chesapeake Energy Corporation Stock Price. (TradingView.com)

5th Robinhood Stocks Bubble: JC Penney

Shopping in the supermarket

JC Penney Company Inc Holding (JCPNQ) also jumped high, to 63 cents from 11 cents in one month. The traditional and also online retail chain is also in bankruptcy, closing dozens of units. The firm is burning cash continuously, and money may run out by the middle of July. But Forbes.com claims three are three buying candidates for the company. (Amazon. The hedge fund investor Sycamore Partners. And a consortium of three, Authentic Brands Group, Simon Property Group, and Brookfield Property Partners.)

“Why are companies lining up to kick the tires and potentially buy JC Penney?”–asked Forbes. They found plausible explanations, the company’s good brand, real estate assets (units in prime malls, and central areas). The valuation of the company is low, stocks fell 72 percent in the last 12 months. (As of June 19, Chesapeake was down 97 percent, and Hertz, 69 percent on y/y basis, by the way.) Is it possible that this is the only stock on this list that still has a stable fundamental value?

Chart 5: A Robinhood Penny Stock. JC Penney Company Inc Holding Stock Price.
Chart 5: A Robinhood Penny Stock. JC Penney Company Inc Holding Stock Price. (TradingView.com)


Do your homework. Also simple as you don’t confuse one company with another. But also do your research to avoid buying worthless securities at a high price level.

Interesting Readings on Other Sites

I found a lot of interesting articles about these topics, I share some with you.

    • Day Trading Has Replaced Sports Betting as America’s Pastime. It Can’t Support the Stock Market Forever. (Barron’s)
    • This is not only a phenomenon of the Robinhood platform. Also E-trade, Charles Schwab, Interactive Brokers experienced skyrocketing of user accounts this year. (SeekingAlpha.)
    • The Rise Of Robinhood Traders And Its Implications (SeekingAlpha)
    • How I’m Betting Against Robinhood (SeekingAlpha)
    • Typically, when traders and speculators run rampant in a hot market, it doesn’t end well. (Investing.com)


I’m not a certified financial advisor nor a certified financial analyst, accountant nor lawyer. The contents on my site and in my posts are for informational and entertainment purposes and reflecting my collection of data, ideas, opinions. Please, make your proper research or consult your advisors before making any investment or financial or legal decisions.

(Photos: Pixabay.com. Cover photo: Image by Gerd Altmann from Pixabay)

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