Future of Investing
How Stash Invest is trying to reach the underserved
- Stash is now letting its customers invest in single stocks, broadening its product offerings beyond ETFs
- The product launch is a means for the company to reach out to prospects who subscribe to the company's newsletter
Stash is letting its customers invest in single stocks, the company's latest major investment product launch beyond theme-based exchange-traded funds. Stash lets customers buy portions of shares (called fractional shares) with a minimum balance of $5. Alongside ETFs, customers can now buy fractional shares of single stocks from selected well-known companies including Apple, Amazon and Google. The company is the latest among a group of micro-investment startups to broaden its product set. Offering single stocks is an incentive for existing customers to grow their assets, and an opportunity to reach out to 5 million prospects who are already newsletter subscribers. Single stock offerings may also just resonate better with customers who feel more comfortable investing in a single company rather than a bundle of pre-selected securities. "It optimizes its competitive stand in field where other prominent high tech firms like Robinhood or Acorns have done relatively well within the same segment -- the millions of underinvested [consumers] who are opening minor accounts," said Aite senior analyst Javier Paz. Stash ETF themes include, for example, "Blue Chips," "Conservative", "Aggressive", or mission-oriented bundles like "Clean and and Green" or "Do the Right Thing." By offering single stocks, customers can select specific companies; as of this week, the company offers Amazon, Apple, Netflix, Walt Disney, Google, Facebook, Microsoft, General Electric, NVIDIA and Walmart. Stash still offers ETFs, but it's added single stocks to respond to demand from customers, co-founder and CEO Brandon Krieg said. While the ability to facilitate fractional share purchases of single stocks was possible through the company's custodian Apex Clearing for years, the offering could draw in customers interested in large company stocks. It will also be an important marketing tool to grow the company's reach among beginner investors. "For the unsophisticated investor who is on the fence about opening a funded account because they don't understand the idea and philosophy behind index investing and ETFs, it offers them one more option, so maybe they could just say 'I want to buy IBM or Disney,'" said Davis Janowski, senior analyst at Forrester Research. The three-year-old startup has so far raised $116 million in funding, including $37.5 million in a Series D round led by Union Square Ventures. The average age of a Stash customer is 29, with an annual household income of $45,000 -- an underserved demographic for whom investments are often out of reach. The product launch solidifies its competitive position with other micro-investment startups. It also aims to entice the company's newsletter subscribers to become paying customers and simplifies user experiences around investing. Stash currently has 1.8 million customers, and 40,000 new clients are joining weekly. As of October, the company had $177 million in assets under management. It waited until this year to release single stocks because it wanted to ensure that "Stash Coach" --- the app's automated investment adviser that launched last year -- was sufficiently advanced to cater to investors interested in single stock offerings. "Stocks are more volatile than ETFs, so we wanted make sure there were guidelines for our clients, and tools along the line to help them make smart and diversified [investing] decisions," said a company spokesperson.