These stocks are popular with young investors.
The 2020 stock market rally to all-time highs has been driven in large part by young first-time investors using Robinhood and other free trading apps. Unfortunately, Robinhood recently restricted public access to its user data. Competing trading app Webull has also seen a spike in new users this year, adding 450,000 brokerage accounts in the second quarter alone. Most of Webull’s traders are between the ages of 18 and 35. With Robinhood data now offline, here’s a look at 10 stocks Webull’s millennial and Gen Z users are buying the most in the third quarter.
Tesla (ticker: TSLA)
Electric vehicle maker Tesla has been one of 2020’s most popular and controversial stocks. EV stocks have been on fire in the last year, and Tesla shares — though dropping in recent days — have gained more than 650% in that time. Young Tesla investors are passionate about EVs and alternative energy sources, and many see CEO Elon Musk as the kind of visionary who can truly change the world. Tesla bears point to the company’s lackluster revenue growth, heavy reliance on regulatory credit sales and inability to hit financial targets as reasons to be skeptical of the stock’s huge gains. Webull users don’t seem too worried.
Like Tesla, Apple recently split its stock, lowering its share price to make it more affordable for potentially younger and smaller retail investors. The bull case for Apple in 2020 centers on the hope for a massive global iPhone upgrade cycle, with the company expected to unveil its first 5G iPhone this fall. In addition, Apple is making significant progress in its transition from hardware sales revenue to a higher-margin, more reliable subscription revenue model. Apple shares are up more than 60% year to date, and the tech giant recently became the first publicly traded U.S. company to reach a $2 trillion market cap.
Boeing Co. (BA)
Apple and Tesla are both high-tech stocks with plenty of bullish momentum in 2020. Boeing is a completely different investment. Boeing is a blue-chip aerospace company that manufactures commercial jets and military aircraft. Millennials are riding the momentum wave of Apple and Tesla but buying the dip in Boeing, which is down about 50% year to date. Boeing fell on hard times well before the 2020 health crisis after its 737 Max was grounded in March 2019 following two fatal crashes. Boeing’s second-quarter revenue was down 25% from a year ago, but millennials are anticipating a rebound ahead.
Advanced Micro Devices (AMD)
Advanced Micro Devices is one of the world’s largest suppliers of PC graphics processors and microprocessors. AMD reported 26% revenue growth last quarter, and it is one of the beneficiaries of 2020’s work- and play-from-home environment. AMD also reported that its server processor market share surpassed 10% in the second quarter. The company has been gaining server market share from market leader Intel Corp. (INTC) in recent quarters partly because of Intel’s manufacturing issues during its transition from 10-nanometer to 7-nanometer chips. Meanwhile, AMD shares are up about 75% year to date.
Microsoft Corp. (MSFT)
Microsoft is another tech giant that has benefited from the work-from-home environment. In fiscal 2020, Microsoft’s revenue and adjusted earnings were up 12% and 14%, respectively. Commercial cloud revenue led the way with 36% growth. Microsoft shares are already up more than 30% in 2020, and millennial investors see more upside in the second half of the year.
Year after year, social media juggernaut Facebook faces controversy after controversy. Yet somehow, the company always finds a way to beat Wall Street expectations. This year, the big hurdle for Facebook was an advertiser boycott in protest of hate speech on Facebook’s platforms. Even with some major advertisers withdrawing their business, Facebook reported 11% revenue growth and a whopping 98% net income growth last quarter as user numbers and engagement on its platforms skyrocketed during the lockdown. Facebook shares are up more than 30% year to date before its next potential challenge — maintaining order heading into the November U.S. elections.
Amazon‘s online marketplace and cloud services business are perfect fits for a shelter-in-place environment in which Americans have limited sources of entertainment. Many millennial investors use Amazon’s services daily. Rising expenses have eaten into Amazon’s e-commerce margins in 2020, but Amazon Web Services has generated a 48% increase in operating profits so far this year. In the first half of 2020, Amazon’s revenue grew 34% and its earnings were up 26%. Given those impressive numbers and the company’s leadership position in key secular growth markets, Amazon shares are understandably up more than 70% so far in 2020.
EV maker Nio is often referred to as the Tesla of China, so it’s not surprising that millennial investors have been scooping up shares of the stock. Like Tesla, Nio shares are up more than 300% year to date as Wall Street enthusiasm for EV stocks has hit a fever pitch. Take one look at Nio’s growth numbers, and it’s easy to see why young investors are excited. Nio reported nearly 147% revenue growth in the second quarter and 64% improvement in operating losses. That momentum continued in August, when the company said its deliveries more than doubled from a year ago.
Nvidia Corp. (NVDA)
Like AMD, high-end graphics card maker Nvidia has been a top market performer in 2020, gaining about 110% year to date. Nvidia continued that momentum in August, reporting a 50% increase in second-quarter revenue. In addition, the company’s data center revenue more than doubled compared with a year ago. Data center revenue got a boost from Nvidia’s $7 billion buyout of networking products and solutions provider Mellanox Technologies. Nvidia’s gaming segment revenue was also up 26%, and investors are hoping that the launch of next-generation gaming consoles in the second half of the year will trigger a PC gaming upgrade cycle as well.
Delta Air Lines (DAL)
As with Boeing, airline stock Delta Air Lines is a departure from millennials’ preferred investment theme of buying high-growth tech stocks with bullish momentum. Delta shares are down more than 40% year to date because of a sharp decline in air traffic, and air travel could take years to fully recover. Domestic corporate bookings remain down more than 87% from a year ago, according to Bank of America. Delta’s stock is trading at about 4.3 times 2019 earnings, and just how long the company will take to return to peak profitability remains unclear.
Popular stocks among young investors:
— Tesla (TSLA)
— Apple (AAPL)
— Boeing Co. (BA)
— Advanced Micro Devices (AMD)
— Microsoft Corp. (MSFT)
— Facebook (FB)
— Amazon.com (AMZN)
— Nio (NIO)
— Nvidia Corp. (NVDA)
— Delta Air Lines (DAL)
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