What makes this investment strategy concerning is the fact that more newbie investors opt for such options. This retail demand surge has garnered the industry over 22.8 million users since 2014.
Robinhood and other such companies have a massive impact on the US stock trading behavior. Thus, regulators like the SEC (Securities & Exchange Commission) have initiated a formal probe on platforms that promote the securities industry.
They are concerned that although new tech options provide access to frequent trading, it is crucial to protect investors. They have now collected public opinion on gaming trading and concluded they must conduct further investigations.
On the other hand, experienced traders are also concerned about the metrics that such platforms use. Some like Warren Buffet say these platforms play a significant role in the gamification aspect.
What is the Impact on Gaming and Financial Services?
Robinhood is now recording a massive drop in user base demand. Also, the pandemic-related boost to the industry is now wearing off and altering volatility. The company’s revenue dropped drastically in early 2021.
It dropped by about 43% to $299 million. Hence, the platform has switched to crypto trading in the UK and other nations. Newbies say Robinhood has democratized trading via lowering the entry barriers. Although most American regulators have not submitted such gaming reports, other European nations have curbed it.
They concluded that gaming promotions in personal recommendations on social media and trading apps lures traders to invest in opportunities before understanding risks.