Yahoo Finance’s Alexis Christoforous and Noah Kerner, Acorns CEO, discuss growth in daily users and the short-squeeze frenzy.
ALEXIS CHRISTOFOROUS: We know that Robinhood angered a lot of small investors last week when it temporarily restricted how they could trade these heavily shorted stocks. Some investors reacted by fleeing Robinhood and flocking to other mobile trading apps, including Acorns. That's the micro-investing app that rounds up your everyday purchases to the nearest dollar and then it invests that spare change in low cost ETFs. Joining me now is the CEO of Acorns, Noah Kerner. Noah, good to have you on the show again. So tell us what business has been like at Acorns just over the past few days since that whole GameStop trading frenzy.
NOAH KERNER: So we're approaching about 9 million accounts. And what we saw was from Tuesday to Wednesday, new user accounts doubled, and from Wednesday the Thursday, new user accounts doubled again.
ALEXIS CHRISTOFOROUS: So when you say doubled, give us an idea of numbers if you can. I mean, I know that going into all of this, I think you had 8.6 million customers. You say now it's closer to 9 million. Can you just give us an idea of how rapidly these numbers have been growing for you over the past few days?
NOAH KERNER: Yeah, January is historically a big month anyway. But we went from about 10,000 to 20,000 to 40,000, and then and then sustaining at that, near or around that level.
ALEXIS CHRISTOFOROUS: I know that part of your business model is you charge a fee. It's tiered. $1, $3, $5, I believe, for certain kinds of accounts that you would open up. I know that Robinhood was a pioneer in commission-free trading online. Many others have followed suit, including the big guys like Fidelity and Charles Schwab. Have you considered doing away with these fees, especially given the fact that you are trying to attract first-time investors who may not have a lot of resources.
NOAH KERNER: So it's a great question. And by the way, we don't offer trading on Acorns. So the way Acorns works, we have an Acorn investment account where you can automatically round up the spare change or make recurring investments. We have a retirement account. We have a kids investment account. We have a full bank account that allows you to save and invest when you spend.
We have a product called Acorns Earn that has tons of brands that invest in you when you shop with them. So the way Acorns is architected is we've got $1 a month, $3 a month, and $5 a month tiers, and each one of those tiers come with a bundle of products that work together to help you save and invest more money. So that's really the business model. And we believe in subscription pricing. And also believe that when the product is free, somehow the customer ends up being the product.
ALEXIS CHRISTOFOROUS: So why do you think then that people are fleeing Robinhood, according to you here, in droves, because your numbers have really gone up quite dramatically. And how do you know that these are folks coming from Robinhood to you?
NOAH KERNER: I don't. And not clear at all sort of what the data on Robinhood is. But at Acorns, really what we focus on is helping you save and invest for the long term, for the future. And our belief is take 90% of your money and put it into diversified portfolios that help you build a better future. And 10% of your money, if you want to make bets, invest in individual stocks, take risks, , do some crypto, that kind of thing, that makes a lot of sense. But it's really important to have that balance. And Acorns is where we want people to put their money for the long term.
ALEXIS CHRISTOFOROUS: Last week, we had Robinhood CEO Vlad Tenev on Yahoo Finance. And we asked him, among other things, why he had to restrict trading in these particular stocks for their customers. And I just want you to listen to what he had to say.
VLADIMIR TENEV: I understand obviously that people want to not be restricted from investing. And we're all about that. We want people to have access to the markets. And Robinhood stands for that. And we're going to do our best to do that in the future and serve these customers.
ALEXIS CHRISTOFOROUS: Do you think when you hear that, I mean, he is in the same space-- Robinhood is in the same space you are playing in, Noah. Do you think that the anger is misplaced here on the part of small investors? And might the demise of Robinhood be greatly exaggerated?
NOAH KERNER: Yeah, I mean, like I said, I think we're in a different space in the sense that Acorns is really about saving and investing for the long term diversification, compounding, that sort of thing. So I try to encourage people-- we try to encourage our customers. And by the way, same thing, for me, I have a money manager. And I'll call my money manager when I'm interested in buying this stock or making this bet or investing in this company. And the feedback I'll always get, and the advice I always get, is great, but remember, less than 10% of your money.
The 90% we want to put into diversified portfolios. We want to put into long term oriented investing. And bet on the broad entire US economy rather than a fragment of it in terms of how you're building your future.
ALEXIS CHRISTOFOROUS: We know that Robinhood had to raise another $2.5-- almost-- billion today. I mean, do you think that Robinhood is going to be a part of the conversation going forward? Or are they going to be an entity going forward? I mean, I know you don't know what their books look like. But just, do you think that Robinhood is going to be able to survive this?
NOAH KERNER: I'm not a prognosticator. And one of the things I try not to do is predict the future, because nobody can. So that's why I bring it back to what we're about and what we do, because you can't predict the future. And because buying individual equities or making short term bets is risky. It is essentially gambling. You should do it with a small percentage of your money. And when you're thinking about the longer term or building wealth or trying to build wealth, when you look back, investing in a diversified portfolio and keeping your money there and letting it sit, that's what works for the long term.
So I don't know what the future holds for any particular company. But I do know the best way to invest your money is diversifying it.
ALEXIS CHRISTOFOROUS: Let's talk about the future of Acorns for a moment. You guys really have been growing nicely, steadily over the past few years. The company was founded in 2012. We had to ask Robinhood's CEO, given everything, are they still going to go public this year? Because they had been talking about going public. He said, we can't even think about that right now. But what about you at Acorns? Are you considering a trip to the public markets?
NOAH KERNER: It's a good question. And by the way, we launched at the end of 2014. And sort of slow and steady they go. And we've grown really nicely in the scheme of things. And we're continuing really strong growth rates across all areas of our business. But we do have a very similar mentality to building a sustainable durable company as we do to the products we offer our customers, which is like, think long term. I want Acorns to be around 100 years from now.
And the things we decide to do for the business, whether it's go public or whatever, are going to be oriented around setting us up for that kind of durability, and making sure we can service our customers effectively over the long term. I mean, that's really it.
ALEXIS CHRISTOFOROUS: All right, yeah, I misspoke. I think I said 2012. I meant to say 2014. Noah Kerner, CEO of Acorns. Thanks so much for being with us.
NOAH KERNER: Thanks, Alexis.