As tensions between Reddit and Robinhood users escalated in recent weeks amid the massive price swings of GameStop, AMC and other so-called "meme stocks," Chicago startup M1 Finance saw a record number of new signups to its online investing app.
At the height of the frenzy in late January, when the price of GameStop was skyrocketing and Robinhood restricted users from trading the stock on its app, M1 was seeing new user signups that were four-times as high as the previous month, CMO Bob Armour said. The startup saw as many as 18,000 new users in a single day and its app store ranking climbed as high as No. 10 in the finance category and No. 84 overall.
M1, which was already growing quickly (it hit $3 billion in assets under management in January, just four months after doubling to $2 billion), saw the GameStop saga throw "massive gas on the fire," Armour said.
"We've had our top 10 days ever in the company this past month," he said. "It's been crazy."
When Robinhood decided to restrict the purchase of GameStop and other stocks last month, it faced a barrage of criticism from users on social media, as well as lawmakers from both sides of the aisle. But that didn't slow down user growth. Robinhood's app was downloaded more than 600,000 times on Jan. 29, which was far and away its largest single-day of downloads, according to the Wall Street Journal. Its biggest day in 2020 saw its app downloaded 140,000 times. Robinhood is currently the No. 1 free app on the Apple App Store.
So while some disgruntled Robinhood users may have jumped ship for M1, that's not likely the main driver of its new user growth. Rather, the media attention brought to app-based investing platforms from the controversy resulted in a wave of new players in the market, Armour said.
Robinhood and M1 also differ in their approach to investing and largely serve two different types of users: Robinhood for day trading and M1 for long-term investing. And even as M1, like Robinhood, was also forced to briefly halt investing of GameStop stock in January as required by its clearing house, the move had far less of an impact on its users, Armour said.
One similarity Robinhood and M1 do share is an avid Reddit community. The M1 Finance subreddit has more than 27,000 users, and the startup frequently monitors the activity and engages with that community, Armour said.
"We’ve always paid close attention to the Reddit community," he said. "Because they're the ones who tell you when you’re good, and they tell you when you suck ... It's a real-time sentiment and survey tool."
M1 raised two rounds of venture funding in 2020, including a $45 million in a Series C round in October led by Left Lane Capital. It's raised just under $100 million to date.
