Investment platforms decreased activity compared to last year
The previous two years, which were marked by a pandemic and tremendous changes in the world, marked a very significant period for the financial market. Investment platforms received a record amount of funds during that period, primarily thanks to the so-called “meme” stocks that were inflated by Reddit users. However, this rise and euphoria in the market were short-lived – this year the situation has changed.
According to experts, the flow of funds to investment platforms has decreased significantly. Such dynamics are due to the fact that many investors are cautious, fearing instability in the global economy and rising inflation. Businessmen are in no hurry to invest money, as they are not sure whether the market will stabilize in the near future.
The decline in the inflow of money is especially noticeable after the surge of activity in 2020-2021. At that time, the securities of the U.S. video game store GameStop caused a real stir. At the end of 2020, a number of hedge funds opened short positions on the company’s shares, and the Reddit community paid attention to this, believing that big players wanted to bankrupt GameStop on purpose. And then the users of the social network decided to help the store and began to buy up its securities. As a result, in December 2020 their value rose by 20%, and in January the increase was at 2500%.
Such a surge in the market also led to the growth of shares of other companies, among them were Nokia, Koss, and AMC. However, a month later the quotes of GameStop declined, and despite the growth subsequently, the network failed to repeat the record levels of January.
According to the Lang Cat consulting company, the situation with GameStop was quite telling for the market. It caused a real hysteria, which did not always reflect positively on the state of affairs of the companies that became the subject of attention of private investors.
Now the pursuit of easy assets is over, the inflow of money is quite low. For example, the analysis of British investment platforms shows that 7 out of 13 platforms operate with losses. Platform managers believe the way out of the difficult situation is to diversify services and expand the list of services. At the same time, they note that their product is focused on long-term prospects, and current losses do not mean the collapse of the business. However, when it comes to new companies, it becomes extremely difficult for them to get funds for development.
As a result, this year there are a small number of new investment platforms. By comparison, last year there was an increase in new companies and funds engaged in direct investments. As for platforms, a number of them reported a record number of investments. Now investors themselves are talking about losses, which means we should not expect them to be active.