Stake, an Australian neobroker specialized in US shares, has raised AU$40 million from Tiger Global and partners of DST Global to propel the expansion of its product as well as its global presence.
The funding round aims to fuel the already rapid growth and global expansion that Stake has successfully printed in the past year: the neobroker grew its customer base more than six times over, and expanded beyond Australia, launching in New Zealand in April 2020 followed by the UK and Brazil.
Stake now has more than 330,000 customers, including almost 40,000 New Zealand customers, but with such tight competition within today’s trading industry, the broker is not allowed to stop pursuing growth.
Matt Leibowitz, Founder and CEO, Stake, commented: “We’re really excited to get to this point, but this is just the start. We set out to change the game for retail investors, and were self-funded for the first four years of our journey. We’ve proven the model and now have the chance to expand our product and bring our zero-brokerage service to more retail investors.”
The retail trading platform offers access to more than 4,000 US stocks, with $0 brokerage as its way to attract new investors. Fractional shares are in the order of the day and Stake allows precisely that: all shares, no matter the headline price, are accessible to retail investors.
Multiple advanced order types, instant trading – before funds have even settled – and analyst ratings and price targets from Wall St firms are other perks offered by the platform.
The investment will be put toward accelerating growth globally, with a real focus on New Zealand. “There’s huge demand in NZ and the local community is one of the most sophisticated. The ambition is to further build the team locally, and deepen our roots with customers, communities and partners,” said Leibowitz.
Expanding the product will also be a key focus as Stake aims to double down on the depth and breadth of access it provides customers. “We started with US shares, but that’s just the beginning. Our DNA is embedded in access, and we’ve got exciting plans to give Kiwis even more opportunities both in the short-and long-term.” Leibowitz added.
Commission-free brokerage was first introduced in New Zealand by Stake and the neobroker intends to lead the way. “It’s moments like these you stop and reflect on what the team has achieved. We’re so thankful to our staff and our incredible customer community who have backed us – they are the reason Stake is where it is. We’re so excited for the next part of the journey, as I sense that this is just the beginning”, he concluded.
In February, Stake analyzed internal retail investor and hedge fund data from the HFM and found that retail investors made 47% profit last year on average. That is almost three times more than hedge funds, whose average performance was 12.3%. Equity funds came in second, ending the year with 19.4% profit.
Retail investment surged in popularity amid the COVID-19 pandemic and the consequent expansive monetary and budget policy from the central bank and government, respectively. That, together with the retail trading platforms – especially equity options trading – led to more participation of the masses. In 2020, retail investors were accounting for 20% of the market’s trades, according to Citadel Securities. In 2019, they only represented 10%.
Stake experienced similarly high growth, acquiring 400% more customers in 2020 compared to the year before, and 75,000 new registrations in the first month of 2021 alone, according to the official statement. This growing trend in investment led the firm to analyze investors’ performance, only to conclude they came out on top in 2020.
Tesla, Amazon, and Nio were the top choices for retail investors, but ‘Green’ companies attracted a significant amount of interest, such as clean energy ETFs among the most popular thematic funds.
Stake’s trading offering includes 4,000 US stocks and ETFs in a pricing structure of a 0.5% FX USD transfer fee on deposits and withdrawals. The Australia-based trading platform was launched in the UK in early 2020. The firm was founded in 2017 to address the barriers to opening a US brokerage account from the UK, with US tax considerations and forms to fill in. By streamlining the sign-up process and automating the documentation including the hefty W8-Ben form directly with its US dealer, Stake made it quicker and easier to get set up.