FinTech News: May 26th, 2017

Summer has sprung! Here are our top Friday reads this week:

A Quant Program is the Reason You Just Bought that ETF (WSJ)

BlackRock is using Twitter sentiment data to sell you their funds at the perfect time.

The World’s Largest Bitcoin Exchange Couldn’t Handle this Week’s Crypto Boom (TechCrunch)

Bitcoin hit all-time highs at $2,800 this week, and traffic was so high it crashed Coinbase, spooking some investors.

Teen chat app Kik to launch digital currency (Finextra)

Kik, sometimes called the “WeChat of the West,” launched its own cryptocurrency, “Kin,” for in-app transactions and services offered on the platform.

Fintech News: April 7th, 2017

News this week: How the CFA made fund managers obscolete, the pitfalls of China’s unregulated retail investment products, and Jamie Dimon hints at JPMorgan’s evolving “fintech” strategy:

Swipe by Swipe, Chinese Smartphone Users Flock to Risky Investments (The Wall Street Journal)

The Chinese government has championed personal finance as a way to diversify their economy beyond manufacturing. But rapid growth has led to poorly regulated products – where anyone can create an ETF and market it to consumers.

Who Killed the Active Manager? (Bloomberg Gadfly)

The CFA certification, Vanguard’s rise, and other factors that led to the decline of the active fund manager over the past ten years.

What Dimon Had to Say About Fintech in his Annual Letter (American Banker)

JPMorgan’s chief used “fintech” to refer to new in-house technologies, API partnerships with fintech startups, and digital banking experiences.

FinTech News: March 24th, 2017

This week, lots of drama in the cryptocurrency world: Bitcoin’s community could split the currency, Ethereum continues surging, as governments debate over who regulates fintech. By the way, what is Ethereum?

Bitcoin Price Plunges on Fears of a Currency Split (The Wall Street Journal)

bitcoin-and-ethereum-sitting-on-a-tree@2xThe bitcoin developer community is divided over block size limits, and it’s threatening to split the currency in two. Unlike the volatility that followed Bitcoin’s ETF rejection, this debate carries fundamental implications for the cryptocurrency’s future. A permanent, definitive record of every transaction is central to Bitcoin’s value proposition, so splitting this history into two will cause uncertainty and could provide liquidity problems. Bitcoin price has hovered around $1000 all week, down from its previous highs around $1250.

New York Grants Coinbase License to Trade Ethereum (Fortune)

Ethereum, the current leader of “altcoin” currencies, has been unavailable to investors in New York. This week, the state legislature granted Coinbase a license to provide Ethereum,  and criticized the OCC’s encroachment on fintech reculation. The debate continues over who is best equipped to regulate fintech – states or the federal govermnent.

What is Ethereum, and Could it Actually Replace Bitcoin? (Mashable)

Ethereum 101: what is it, and why are people suddenly talking about it? It’s a nerdier and slightly more complicated version of Bitcoin – and some companies are getting behind it. It’s up 200% in the past month. Get the overview here.

 

Who’s buying $SNAP, and where?

$SNAP’s IPO has dominated financial news for the past month. After the stock gained 45% on its first trading day, bloggers called it “dumb money,” and not a single Wall Street analyst gave it a buy rating until today. In this post, we compare our transaction data for three social media giants: here’s our take on $FB vs $TWTR vs $SNAP.

Not So Millennial:

According to the headlines, $SNAP investors are a bunch of college-aged power-users buying their first stock ever. Our data points to a more diverse group of investors: our average $SNAP order size was over $10,000, which was slightly higher than the average order for $TWTR. A fair share of young people invested in $SNAP, but given the volume and quantity of large retail orders, it looks like Gen-Xers and Boomers are buying shares as well.

Fear of Missing Out

ezgif-3-b9aa9a85bdWhat’s more interesting is where people are trading these stocks. A large portion of our trade data comes from from social trading communities like StockTwits, where investors can share predictions on a stock’s direction. The $SNAP IPO generated huge buzz on these networks, with a steady stream of speculators sharing their opinions and price targets for the company.

 
Social InfluenceIt looks like all the buzz influenced some investors to join the party and buy in. Investors were twice as likely to buy $SNAP from a social investing community when compared to $FB and $TWTR. Sounds like people in the forums are buying $SNAP because, well, everyone is doing it.

Trading the Headlines

Though everyone was talking about $SNAP last week, most financial commentators were talking $SMACK. Investors were much less likely to invest in $SNAP from a news website; they were 10 times as likely to buy $FB and 3 times as likely to buy $TWTR when reading the financial news. If you take a look at the headlines, you can see why:

News InfluenceSnapchat IPO: Don’t Confuse Popular with Profitable (Forbes)

Is Snapchat IPO the Good Kind of Crazy? (Bloomberg)

SNAP is Clown Car 2.0 (Fortune)

The Complete Bearish Case Against Investing in SNAP (Business Insider)


So, if you’re reading the grim headlines in the news, you’re probably not investing in Snapchat without doing more research elsewhere.

In the weeks since $SNAP’s IPO, we’ve been surprised by large order sizes of the supposedly “millennial” stock, the large influence of social platforms, and the small number of news-related transactions. Got ideas for our next data dive? Tweet us!

Fintech News: March 17th, 2017

This week: the Bitcoin ETF was rejected last Friday, and alternative cryptocurrencies are rallying, China’s winner-takes-all fintech market, and $SNAP’s IPO could encourage private unicorns to make the jump and go public.

Ethereum Price Tear Continues Setting All Time Highs (CoinDesk)

Ethereum, a bitcoin alternative, rallied 230% this week. The cryptocurrency’s main feature is “Smart Contracts,” which automatically execute when the conditions are met. That’s obviously useful for businesses, and JP Morgan, Intel, and Microsoft are experimenting with it. This week, it rallied from $15 to a peak of $50 as speculators questioned Bitcoin’s ability to remain the dominant cryptocurrency.

Alibaba, Tencent to Get Most of China Fintech (Investopedia)

The Chinese fintech market is predicted to grow to $67 Billion by 2020, and it appears the giant tech companies are going to reap most of the profits.

Snapchat Means IPO Ice Age is About to End (Forbes)

The most valuable private tech companies in the country – Airbnb, Uber, etc – have avoided IPOs at all costs for the past few years. Now, Snapchat’s (relative) success could encourage them to change course and go public.

Fintech News: March 10th, 2017

This week in Fintech: 72 hours until the Bitcoin ETF decision, and discrimination in online lending practices.

Bitcoin May Go Boom if SEC Approves Winklevoss ETF (Fortune Tech)

The Winklevoss twins filed their Bitcoin ETF application four years ago. The SEC’s decision on whether or not to approve it is due Monday the 13th. The decision has huge implications for mainstream adoption of blockchain technologies, beyond illegal transactions and funneling assets out of China. In the short term, Bitcoin price is shooting up from speculation. Stay tuned.

Is it OK for lending algorithms to favor Ivy League schools? (American Banker)

While fintech companies often claim to be more inclusive, online lending algos are drawing criticism for favoring Ivy League graduates. Recent research shows that less prestigious institutions outpace the Ivy League, when it comes to getting poor kids into the 1% in their adult careers. In short, there is still room for debate over which assumptions should govern alternative lending.

 

Fintech News: March 3rd, 2017

This week, the ripple effects of dropping fees in the wealth management industry, and a robo-advisor just for Asian-Americans.

The Asset Management Pressure Cooker (Bloomberg)

As money continues moving to low-fee, passively managed funds, BlackRock, Fidelity and Vanguard are seeing assets soar to new highs. But the revenue that fund managers generate per dollar is falling, putting pressure on the securities industry to rethink the way they do business.

Ex-Scottrade execs see Asian-American, Chinese market ripe for robo advice (Financial Planning)

As robo-advisors have grown in popularity, new entrants have started marketing them to specific demographics, such as Ellevest for women, and FinHabits, for Latin Americans. Now, Scottrade execs are forming a robo for the Asian-American community in LA and NY.

E*Trade is the Latest Entrant in the Online Broker Price War (Yahoo! Finance)

After remaining silent as its rivals, Schwab, TD and Fidelity slashed fees, E*Trade joined the race by dropping its trading fee from $9.99 to $6.95.

 

Trade It Funding Announcement

We are excited to announce that we closed the last tranche of our $8MM seed round. Valar Ventures was the lead investor with participation from Valar Ventures Citi Ventures and France-based Newfund.

Our team set an ambitious goal in 2016 and successful processed more than a billion dollars in trade orders and five billion in assets linked last year.

The new round of funding will allow us to accelerate our growth by adding new partners to our expanding ecosystem of developers, create and launch new products, and continue hiring best-in-class engineers.

We will also continue to expand our API management program for top tier financial institutions, providing a turn-key solution for a secure, compliant and efficient distribution of their services.

We look forward to working with our existing and new partners as we power the retail investing infrastructure.

FinTech News: February 17th, 2017

This week in fintech: stock trading vs robo-advisors, bitcoin shows signs of maturation, China’s PayPal is raising billions, and Nasdaq’s 2017 fintech predictions:

Why DIY Investors Still Aren’t Flocking to the Robo-Advisors (Forbes)

The robo-advisor is a fast-growing trend, but active investors aren’t going anywhere. Here’s why the market for active trading is growing, not shrinking, alongside the market for automated investment advice.

Is Bitcoin Growing Up? (Bloomberg)

As Bitcoin’s use cases become more “mainstream,” its price is becoming much less volatile. While there is no ETF for Bitcoin (yet,) futures contracts are now allowing more investors to hedge their positions or even short Bitcoin, which is helping to smooth out price fluctuations.

Ant Financial Raising $3 Billion to Fund Deals (Bloomberg Tech)

Ali Baba’s financial arm, the owner of AliPay, is raising $3 Billion in debt to fund its latest acquisitions, including the $880 million purchase of MoneyGram, which has a presence in the US. The fundraising comes ahead of their planned IPO, which is expected to value the company at $60 billion, even higher than PayPal.

State of Fintech For 2017 (NASDAQ)

Nasdaq put out some predictions for 2017 fintech. Among them: cryptocurrencies grow up, chatbots find a home in finance, and AI automates the back office.

Data Dive, Part 1: Trading The 2016 Election

How has investing changed after the election? In our first Data Dive of 2017, we use transaction data to find out.

Since Trump’s win in the 2016 election, the S&P 500 has rallied 10% and hit multiple all-time highs. The market may be on an upswing, but how has investor behavior changed? To answer this question, we’re taking a look at our transaction data, comparing behavioral patterns from the month before the election with those exhibited in the weeks after the news.

Here are some of our findings:

Order Size.pngBuy Low, Sell High?

Looks like some investors are locking in their gains after the Trump bump. Since the election, our average sell order size has shot up by 50% while the average buy order size dropped by 11%. It looks like investors have been hoarding cash since the election, maybe waiting for an opportunity to buy at a discount if the markets get shaky.

Peak Hours.pngLazy Mondays

Before the election, Monday mornings were red hot on the trading floor. Post-election, traders started waiting until the end of the trading day to hit confirm – maybe holding out until volatility settles around 2-3pm.

It appears traders continued taking their sweet time after Monday into the middle of the week. While Tuesday was the hottest day of trading before the election, Wednesday appears to have regained its title as “hump” day, claiming the highest average volumes in the weeks following the election.

Peak Trading Days.png

 

Draining the Swamp

tech-inflowsWhatever your political views, it’s fascinating to see how a new administration can affect people’s’ portfolios. For example, our data suggests that investors are “draining” tech stocks from their portfolios after the election. Despite a few high-profile endorsements, Trump’s win is widely considered a net loss for the tech industry, which relies on visas for highly skilled immigrants to power innovation. As a result, investing in tech companies means is riskier in 2017, and investor appetite for the sector has cooled off.

A Golden Opportunity

Gold Outflows.pngGold’s price tumbled 12% in the last weeks of 2016, but it looks like retail investors are staying put and holding onto the precious metal. While inflows remained relatively steady, our Gold-related outflows plummeted after the election. Given Trump’s unpredictability, this makes sense; Gold is seen as a safe-haven investment, and its value often increases during times of uncertainty.

Got a hypothesis for us? Interested in additional info? Email us or Tweet your data requests @TradingTicket for our next installment of the Data Dive series!

About the Author

James Barrios is a Management Science & Engineering Masters Candidate at Stanford University.  James will be investigating patterns, trends, and other useful data extractions over the coming months.  For this piece, James compared “Buy” and “Sell” orders placed before and after the November election.