- Corporate execs are using audio-conferencing app Clubhouse to directly talk to retail investors.
- It’s a move to recruit more individual stockholders after decades of mutual funds dominating portfolios.
- CarParts.com used Clubhouse to field questions from retail investors after its earnings report, per the Times.
Corporate executives are using audio-conferencing app Clubhouse to directly communicate with retail investors, according to reporting from the New York Times’ Matt Phillips.
After hosting a post-earnings report conference call with Wall street analysts, executives at CarParts.com turned to Clubhouse to field questions from a group of over 2,000 listeners, the Times reported. Audience members asked questions like: How does the business work? Are CarParts.com shares worth buying?
It’s a move that appears to be an effort to communicate more directly with retail investors and recruit more individual shareholders after decades of mutual funds dominating investor portfolios.
CarParts.com’s chief financial officer and chief operating officer called the Clubhouse session an experiment.
“We’re trying to disrupt the way people fix their cars,” he told the Times.”Is there a way for us to disrupt how retail investors communicate with management?”
Retail investing boomed in 2020 as people stuck inside their homes and fueled with extra stimulus cash turned to commission-free apps like Robinhood during the pandemic. The amount of individual stock ownership also grew to the highest level since 2014. According to the Federal Reserve, American households bought roughly $211 billion in individual stocks last year.
Whether that trend of individual stock ownership will continue could depend on the investor fanbase that companies build, and Clubhouse is one avenue executives are using to get closer to retail investors.
Though a recent note from JPMorgan’s global markets strategy team says that US retail investors are rotating away from buying individual stocks and stock options and towards buying more traditional equity funds, as was the case before the pandemic.
During the first week of April, stock ETFs saw strong inflows of $18 billion, JPMorgan noted. Meanwhile, measures of call option buying that rose to a record high in January have begun to subside over the past two months, a sign that retail investors are less willing to invest in call options on individual stocks. Similarly, JPMorgan found that equity baskets containing stocks popular with US retail trading platforms have also slowed over the past two months.
JPMorgan noted that monitoring retail flows into equity funds will be an important metric for determining the state of the individual stockholder.