The financial markets have witnessed increasing investor demand for online brokerage services over the last several months. Because the potential for big returns continues to entice traders to online brokerage platforms, the industry is expected to grow significantly. However, two well-known companies in this space, CoinBase (COIN) and Robinhood (HOOD), have been unable to capitalize on the current industry trend owing to their weak financials. So, we think these stocks are best avoided now. Read on.Over the past several months, retail investor participation in the stock market has increased significantly. The growing number of discount brokers and access to multiple investment tools offered by various platforms contributed substantially to this trend. Also, as people seek to capitalize on pandemic-induced volatility in the stock market, the number of active investors has increased considerably.
The growing adoption of digital platforms for trading stocks and other securities, coupled with increasing technology spending by online brokerage firms to attract millennial investors, should continue to fuel the industry's growth.
However, popular online broker stocks CoinBase Global Inc. (COIN) and Robinhood Markets Inc. (NASDAQ:HOOD) have failed to capitalize on the industry tailwinds due to their poor fundamentals. Thus, we think these stocks should be avoided now.