PULLMAN, Wash. — Millions of investors using the Robinhood app tend to favor simpler, easy-to-understand stocks, according to new research from Washington State University — and those stocks outperformed more complex firms during the study period.
Those are among the findings of a new paper that examined investment patterns on Robinhood, the popular commission-free, game-like app and web platform. Some 28 million people use Robinhood, with an average user age of 35, according to the company. Understanding how they invest is important as digital natives reshape the market.
“I ask my students, ‘How many of you use Robinhood?’ and almost all of them raise their hands,” said Mario Reyes, professor and chair of the Department of Finance & Management Science in WSU’s Carson College of Business. “These preferences have market effects. If Robinhood users prefer simple stocks, demand for those stocks will increase. It also has implications for investor relations. Companies should design communications to reach not just sophisticated, big institutions, but inexperienced young investors, as well.”
The research, published in the journal Finance Research Letters , was co-authored by Ruixue (Rachel) Gao, who completed her PhD at WSU and has taken a position at Central Connecticut State University, and George Jiang, professor and Gary P. Brinson Investment Management Chair in Finance & Management Science.
Founded in 2013, Robinhood Markets offers a mobile app and web-based platform, allowing users to trade stocks, options, and cryptocurrencies, as well as access to banking and credit card services.
“The platform is very, very popular, and generally, these investors are very young,” Gao said. “We want to know what young people care about because they are the future of the stock market.”
Past research has demonstrated that Robinhood investors are drawn toward stocks with high “idiosyncratic volatility,” which means their price variations don’t align with overall market activity. Such firms or portfolios may have unique circumstances — such as a famous owner — and are usually less diversified and complex than other stocks.
The researchers analyzed Robinhood holdings from May 2018 to August 2020 and conducted regression analyses with two measures of complexity: accounting complexity, based on the number of accounting items in a company’s annual SEC filings; and organizational complexity, or the number of businesses or operating segments within a firm. Examples of firms with single business segments include Target Corp. and Ross Stores.
As anticipated, more Robinhood users bought stock in firms that were less complex and easier to analyze, an effect that persisted even when the results were controlled for firm size. The approach seems to have paid off, with the simple stocks favored by Robinhood investors outperforming more complex stocks.
Across all comparisons, the preference for simplicity persisted.
"What stands out is that Robinhood investors consistently gravitate toward companies that are easier to understand,” Reyes said. "Whether we measured complexity through financial reporting or business structure, the pattern was the same."
Finance Research Letters
Data/statistical analysis
People
Robinhood: Simple app simple stocks
2-Jul-2026