Stash Gains 6 Million Customers, With Crypto Integration on The Horizon

Stash, a modern brokerage focused on financial accessibility and gainful investing, is looking to add crypto support to expand its offerings, which may help it lure in GenZ customers. This could form part of the next trend for FinTech firms looking to widen their offerings by adopting crypto assets onto their platforms.

Where Does Stash Fit into Current FinTech Ecosystem?

Although the last two years have been ridden with setbacks, the FinTech industry took advantage of this period to make itself more streamlined and accessible than ever. One only has to look at key indicators demonstrating this to be the case:

• CB Insights shows there are over 79 unicorn FinTech companies as of January 2021. These are private companies with a market cap of over $1 billion, Stash included. Furthermore, over 500 FinTech unicorn startups have popped up accounting for $1.78 trillion in valuation.

• Although the lockdowns resulted in a drop of VC (Venture Capitalist) funding to $6.1 billion in Q1 2020, the FinTech sector still acquired $25.6 billion in global investments in H1 2020.

• The Global X FinTech ETF (FINX) made 3x gains, from $15 per-share value in 2016 to the current price of $45 per share. As one of the oldest such ETFs, FINX is composed of a number of FinTech companies that are pushing the industry’s envelope, led by Square, Coinbase, Fidelity, Intuit and other 50 FinTech companies.

Overall, the US is still the global leader in FinTech startups, accounting for 10,605 firms as of February 2021, which is a 17% increase from the previous year.

Stash’s Road to Finding Its Niche

Valued at $1.4 billion as of February 2021, Stash was founded in 2015 by Brandon Krieg (current CEO), Ed Robinson and David Ronick. Headquartered in New York, Stash was not left untouched by the GameStop/AMC short squeeze saga. On January 29, at the peak of the trading frenzy, it too was forced to temporarily suspend trading of those stocks.

The involvement of the Apex Clearing Corporation is not surprising given what has already been revealed from the lawsuit against Citadel Securities, Robinhood, and other parties involved with limiting GME trading. However, Stash opted out of the usual day trading game, as highlighted by Stash founder and CEO Brandon Krieg to CNBC in February 2021.

“We purposely built a bad day-trading system…Our brand and our message, as well as our onboarding are not attractive to someone who’s coming to day trade.”

When tracked comprehensively, day trading for most people leads to extreme risk. While technical indicators are helpful, they offer no guarantee that a single trade will not be a losing one. According to this multi-university study led by UC, day trading leads to losses for among 72 – 80% of traders.

For this reason, although Stash allows for stock and funds trading during four trading windows per day, making it unsuitable for high-frequency day traders. Instead, Stash incentivizes long-term investing through customized portfolios and an inviting user interface.

Stash offers competitive, low fees ($1, $3, and $9 per month tiers) and automated guidance for building a user’s portfolio. From our review of the Stash app, the latter may lead to superior investment results from Robinhood’s DIY approach to trading.

Most recently, in March 2021, a month after successfully raising $125 million, Stash introduced Smart Portfolio as a further evolution of the platform on the opposite end of self-directed investing. As a “set-and-forget” approach, Smart Portfolio automatically rebalances portfolios on a quarterly basis if it shifts 5% off its target allocation.  

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Is Stash Going The Route of eToro?

From eToro and Acorns to Coinbase’s rival, Bullish, SPACs have become go-to funding vehicles before going the publicly traded route. Correspondingly, SPACs have raised more funds this year than all of 2020. Given that Stash has crossed the threshold of 6 million users this year, SPAC is now on the table. However, Stash’s financial advisor, Goldman Sachs, has yet to determine that particular roadmap, according to Stash CEO Brandon Krieg.

“Goldman Stash acts as our adviser and we continuously assess the market to determine our optimal financing strategy,”

In the meantime, Stash is likely to bolster its one-stop-shop platform with cryptocurrencies in 2022, as a part of its Smart Portfolio feature. This should go hand-in-hand with Stash’s Stock Back fractional-share rewards. A unique take on cashback rewards, any time you pay with your Visa Stock-Back debit card, you receive rewards in the form of fractional shares that match your existing portfolio.

Compared to the pre-lockdown era, Stash subscribers have contributed 50% more to their portfolios, accounting for $3 billion AuM (assets under management). Stash reached the milestone this Summer, following its acquisition of PayGrade, an educational simulation of all financial services and products.

There is no reason why a similar model should not be adopted for cryptocurrencies, as previously spearheaded by Crypto.com. After all, a recent Cardify survey has made a strong case that retail investors view cryptos as more “fun” than both stocks and bonds.

What do you see as the most important part of FinTech service? Ease of use, rewards system or automatic portfolio management? Let us know in the comments below.