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Retail Investors Are Flooding In To Buy Meta's Face-plant Dip

Tyler Durden's Photo
by Tyler Durden
Thursday, Feb 03, 2022 - 06:00 PM

Years of BTFD instinct don't go away just like that, and with Facebook plunging the 26%, its biggest drop ever, and also the biggest loss of market cap by any company in US history - putting it in context FB has lost more value today than the market cap of 455 S&P500 members - and after its opening collapse, the retail crew has arrived and according to Fidelity, thousands of retail investors are buying the dip this morning.

According to Fidelity, FB was by far the most traded among individual investors using Fidelity’s platform, with volumes more than five times that of Tesla, the second-most traded stock according to Bloomberg.

The imbalance was 80% in favor of dip buyers, with more than 49k buy orders placed on the platform as of 11:52am,  compared to 12k sell orders as of 11:52 a.m. in New York. In context, the staggering amount of buy orders was roughly seven times the demand for Amazon, the second-most bought stock.

The flood of retail buying is hardly as surprise, and it represents a continuation of the relentless, if somewhat more subdued, purchases by ordinary investors.

According to JPMorgan, retail traders resumed their bullish stance this past week and net bought $6.75B, the second highest weekly total on record. S&P 500 ETFs continued to see strong inflow (+1.85 sigma above 12M average). On the other hand, NASDAQ 100 ETFs saw bearish flows (-1.3 sigma below 12M average, leverage adjusted). Notably, retail traders bought $181MM of SQQQ (-3x NASDAQ 100) this past week, and $540MM over the last four weeks, while there was limited appetite for TQQQ (+3x NASDAQ 100), as seen in the first Figure below.

Unlike the previous week when retail traders bought mostly broad market ETFs, they were more selective in buying the dip this past week and directed the majority of their inflow into single stocks rather than ETFs. In particular, long-time favorites such as AAPL (+$305MMM), NVDA (+$224MM), MSFT (+$221MM) and AMD (+$217MM) received strong inflows.

In the options market, retail traders net sold -$1.5B of delta this past week. SPY and QQQ options accounted for 85% of the delta sold. This is likely due to profit taking as we observed strong bullish option flows on these two ETFs in the previous weeks.

Average Retail volumes (as a % of total orders) fell this week for Large-caps (-0.5% to 7.5%) while Small-caps were relatively flat on the week (~11.4%). Overall, average January volumes were middling for Large-caps (~8.1%) while some of the lowest on record for SMid-caps at ~11.6% especially in comparison to record SMid-cap volumes in January of 2021.

Here is the latest Retail Positioning according to JPM:

  • Large-cap: At the industry group level, there was an overall decline in volumes led by Consumer Services, Materials and Software. However, net buying was strong across the Tech complex, specifically Semis (e.g. NVDA, AMD, INTC), Software (e.g. MSFT, PYPL, PLTR) and Media/Entertainment (e.g. NFLX, FB, DIS).
  • SMid-cap: Overall volumes were lower driven by Retailing and Pharma/Biotech. However, there was relatively strong net buying across Media/Entertainment (e.g. AMC), Software (e.g. MARA, APPS, ASAN) and Capital Goods (e.g. NKLA, FCEL, STEM).
  • Thematic: Retail had another week of buying into the JPM Covid Recovery theme expressing a view through Covid-19 International Recovery (JPAMCRIB) names. Retail continues to show a net preference for Sustainable Dividend (JPAMSDIV) over Unsustainable Dividend (JPAMUDIV), Low Leverage (JPAMLOLV) over High Leverage (JPAMHILV) and Cyclicals (JPAMCYCL) over Defensives (JPAMDEFN). We note that the retail selling of China Exposure (JPAMCNEX) names has largely reversed this past week.

Options Activity:

  • Delta: In the top five this past week, the single stocks with the most bought delta were AMD, NFLX and NVDA along with SPX and NDX among indices. The companies with the most delta sold by retail were TSLA, AMZN and AAPL and among indices QQQ and SPY.
  • Gamma: The most bought gamma by Retail included AMZN and NVDA among single stocks along with SPY, SPX and QQQ among indices. The most gamma sold included indices (e.g. HYG) along with TSLA, AAPL, GOOGL and MSFT among single-stock.

Visual summary of recent retail activity:

Company-Specific:

  • Large-cap: Higher turnover among the top 10 with the addition Apple (AAPL), Nvidia (NVDA), Advanced Micro Devices (AMD) and Netflix (NFLX). Net retail buying among the top 10 increased to $1.4B (vs. $0.6B last week).
  • SMid-cap: High turnover within the top 10 with all but one name churning. New names included AMC Entertainment (AMC), Marathon Digital Holdings (MARA), Fisker (FSR), Macy's (M), Digital Turbine (APPS), Asana (ASAN), Fuelcell Energy

And here are the 50 companies which according to JPM have the largest weekly retail order imbalance:

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