The top US stocks Australians were trading in May
Tesla, Beyond Meat and Disney were among the most traded stocks by Australian investors.
Matt Leibowitz is the founder of share trading platform Stake and a guest contributor at Finder. The views and opinions expressed in this article (which may be subject to change without notice) are solely those of Matt's and do not necessarily reflect those of Finder and its employees.
Each month, I'll be running through what's hot on the Stake platform. It's a quick snapshot of what US stocks our traders are jumping on board or selling out of. Either way, they're investing in the stock market and trying to make a buck.
Remember, this is not advice. Do your own research, make your own decisions and take responsibility for your investing. That's where the challenge and joy in being in the stock market come from.
May was all about the Special Purpose Acquisition Companies (SPACs). SPACs are companies that list on a stock market primarily to raise capital to acquire other businesses.
Sound risky? They can be – although there have also been some big success stories.
Two such cases are Diamond Eagle Acquisition Corp (DEAC) and VectoIQ Acquisition (VTIQ). Back in April, Diamond Eagle completed a merger with gambling platform DraftKings (DKNG). In June, VectoIQ Acquisition (VTIQ) completed a reverse merger with Nikola Motor, a private company that produces hydrogen powered long distance vehicles; the name is a tongue-in-cheek jab at Tesla.
A reverse merger is a unique way of entering capital markets where one company takes over another in order to list. So, in this case, DEAC became DKNG and VTIQ (VectoIQ Acquisition) will become Nikola Motors.
Following the takeover and recommencing of several world sporting leagues, DraftKings rocketed up from $20 to close May at around $40.
While there is money to be made speculating (read: gambling) on SPACs, there can also be a lot of money lost as the market adjusts its valuation on the private company with each piece of new information.
That hasn't stopped traders from buying up VectorIQ Acquisition Corp. Last month it was the third most traded US stock by Stake's users and the top traded stock by 18-24 year-olds. It was also the fifth biggest gainer on our platform:
Most traded stocks in May
What your generation is trading
|18-24s||VectorIQ (VTIQ)||+119% in November|
May's 5 biggest gainers
- Adaptimmune Therapeutics (ADAP) +229%
- Macrogenics (MGNX) +195%
- Novavax (NVAX) +154%
- Camping World Holdings (CWH) +147%
- VectorIQ Acquisition Corp (VTIQ) +119%
Here are the US stocks making the biggest moves last month by Aussie traders.
Aurora Cannabis (ACB): Traders still want a piece of 2018's heroes. Despite trading at well over 90% below its high, ACB popped on the back of a solid earnings and traders were quick to rush in.
Moderna (MRNA): Moderna has doubled since the beginning of March as the biotech company searches for a coronavirus vaccine. Traders are speculating on its success.
Beyond Meat (BYND): With the disruption to traditional meat supply chains, another former market darling has had a great few months. Up 140% since the market bottom in late March, just like weed stocks, traders may be thinking back to the giddy heights BYND has traded at.
The ETF buy up
The US Federal Reserve announced its first foray into the ETF market when it started buying corporate bond ETFs in May. By buying bonds, the Fed gives companies the money they need to keep the lights on. The news isn't particularly unexpected, nor is it particularly controversial. What people are asking is, where does it stop?
Meanwhile, the Bank of Japan is on track to be the largest holder of equity and bond ETFs in the whole Japanese market, overtaking the national pension fund. Yes, it holds Japanese stocks on its balance sheet. US$250 billion worth to be exact. It's an unprecedented position to be in but not a new one. It's been purchasing ETFs for close to a decade now.
The list of questions is endless. Could this result in an ETF bubble forming as companies rise in price simply for being part of an index? More pressingly, what will the Bank of Japan do next? What happens when it starts to unwind and flood the market with supply?
With an ageing population and horrible deflationary spirals, the BoJ seems willing to take on the risk given conventional monetary policy is as effective as lockdown in Florida.
There are some key disclaimers on this. These are stocks that may suit my strategy and not yours. I have a stop loss planned and ready before every trade. These stocks may go down, or up... or nowhere. Take responsibility for your investments – that's the real joy of being in the market. The money comes from hard work and discipline, not from stock tips.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.