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Nikhil Kamath - India’s youngest billionaire and True Beacon Global Co-Founder & CIO; Zeroda Co-founder, joined Yahoo Finance to discuss the latest on Robinhood.
ADAM SHAPIRO: HOOD, they closed up today. Wow, look at that. 48-- 40-- that's $46.80. And in aftermarket, it's up about 3%. Let's talk with someone who knows a little bit about launching a brokerage.
We invite back into the stream Nikhil Kamath. He is India's youngest billionaire and True Beacon Global co-founder and CIO. He understands a little bit about these kinds of things. And can you help us to understand? We saw Robinhood-- you know, the retail investor platform that people were celebrating-- didn't do so well on its IPO, and now it is doing quite well. Any explanation for this?
NIKHIL KAMATH: Hi. Well, at the current juncture, everything related to equity and stock markets, this particular asset class, is doing well across the world, not just in America, but in Europe and Asia as well. It could be a stock broking company, an asset manager, a clearing house. All of these companies are doing really well. So I guess Robinhood, in a certain way, is also riding the momentum that is prevalent in the sector.
SEANA SMITH: I guess before for today, though, investors were a little bit hesitant or seemed a little bit hesitant to jump in. I guess, why do you think the reception at first was a little bit lukewarm, compared to what we were initially expecting to see?
NIKHIL KAMATH: The price multiple was fairly frothy. From a fundamental viewpoint, if you were to analyze the company as a multiple of its profit, the valuations seem a bit far fetched. But that's the case in so many companies now. I don't think people are gauging a company based on profits today but what the future potential could be. And if this inherent momentum in the equity asset class continues to remain, probably stocks like Robinhood will continue to do well.
ADAM SHAPIRO: You know, you have-- I think it's the number one brokerage in India--
NIKHIL KAMATH: Yes.
ADAM SHAPIRO: --Zerodha. And I'm curious, the retail investor-- when we talk about the retail investor in the United States, I have to believe the retail investor in India, the same kind of animal instincts-- or is there a difference?
NIKHIL KAMATH: Yeah, so India is not as penetrated as America is. Only about 2% of the population of our country-- it is a fairly large population-- but 2% has ever had access directly or indirectly to equity. And this is a very small number. It's growing rapidly. The trend we have seen in the last 18, 20 months, the growth has been exponential. But it will take a long time before we catch up to, you know, the level that, say, the US is at and penetration numbers are really high. But the same animal spirit does exist in India. Everything equity and equity related is doing tremendously well today.
SEANA SMITH: Do you think that the momentum that we've seen with the retail trader-- do you think that's here to stay going forward?
NIKHIL KAMATH: Personally, I would be a bit cautious. We have seen these bull cycles historically across the world. It's getting to the point where not just, you know, your first circle of people, but everybody you know seems to be recommending a stock or is buying one equity or another. So it is getting into scary territory. Relative to historical valuations, we are fairly expensive today, and one has to be cognizant to that and, you know, pay heed to caution. Stay cautious when things are as expensive as they are today, maybe.