Commonstock aims to verify YOLO trades, receives new round of funding
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Commonstock’s founder and CEO, David McDonough
Commonstock
One new social network bets that retail traders who are enthusiastic will continue to thrive and they desire more transparency than Reddit.
Commonstock allows you to discuss trades and financial market issues on social media. Commonstock features a Twitter-like newsfeed, where users can rank and comment on investment strategies. It’s also not anonymous, unlike Reddit’s WallStreetBets forums. Brokerage accounts can be linked by traders to confirm that their investments are genuine.
Commonstock’s founder and CEO David McDonough stated that the ability to show one’s percentage ownership in Peloton or Tesla is a great way to get rid of a lot if the grifters. “There’s no lying about it — you can see somebody’s performance in real time.”
Coatue, QED and Floodgate led the $25 million Series A round of funding for San Francisco’s start-up. Upside Ventures was also involved. The valuation was not disclosed. Commonstock was also early strategic investors in hedge funds, including Dan Loeb, Stanley Druckenmiller and Bill Ackman.
To allow traders to link with Fidelity or Robinhood accounts, the company makes use of software called an API. Profiling allows users to display their stock selections and track record. The feed displays the total dollar value of all followers instead of the number of followers.
Platform officially launched in August 2020A few months before the stock exchange went viral, A small group of retail traders created the Stock Market in late January 2021. banded togetherOn social media, to purchase GameStop. McDonough who quit Google to launch Commonstock said the meme stock saga had an instant user boost. He said that month-over-month, the client base was more than doubling without advertising.
Roaring Kitty Effect
GameStop aside. The past several years have seen a revival in retail stock trading. According to JMP Securities, this year, the number of traders entering the stock market was 10 million. This is in line with last year’s record. Investors are regaining interest due to the widespread availability of fractional trades, zero commissions, and stimulus checks.
McDonough stated that although it sounds contradictory, Roaring Kitty and AMC, as well as GME, did more for educating a generation than any financial books or classes. It’s now part of the social debate that investing is important.
The retail trading volume has dropped to a minimum from January’s peak. McDonough noted that there is still a lot of interest and “stickiness” on the platform. McDonough said commonstock users may have been attracted to the games by GameStop, but they have maintained their investments in the markets. He said that younger traders don’t place “YOLO,” or “you only have one” bets. They tend to invest in the knowledge that Peter Lynch, Fidelity’s fund manager, has taught them.
It’s usually internet culture or meme stocks.
“They know that when Elon Musk tweets, it’s going to drive a lot of attention to Tesla, or they love their Peloton bike so they’ll buy a share of Peloton — when you have 10 million more people doing that, it creates a new purchasing power in the market that can move prices,” McDonough said.
Commonstock’s social media interface
Commonstock
Frank Rotman (co-founder, partner, QED Investors) was one of Commonstock’s initial backers. He said that they were able to increase their Series A funding by having a social media platform with “all signals, no noise”.
Rotman explained that Reddit has everyone willing to offer their help and trade ideas, but they don’t give out enough information to identify the people who are giving it to them. Rotman said, “It has devolved into high fiving each other and memes. It’s not about stocks nor the companies themselves.”
Commonstock is still not monetizing. McDonough indicated that he intends to use the same strategy as Snapchat, Twitter, and Facebook for growing user engagement and making more money.
McDonough stated that Commonstock will eventually consider subscription services, as well as advanced features and the anonymization and aggregation of data. McDonough said that they wouldn’t sell their data to third-party hedge fund managers or to other parties and would instead offer the data as an asset to traders.
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