Parrot Finance: The Social Trading App Revolutionizing Retail Investing

Follow Top Investors and Replicate Their Trades with Ease

Author

Trey Layton
June 27, 2024

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How Parrot Finance's Social Trading App is Disrupting the Investment Landscape

My favorite accounts on Twitter are the “Nancy Pelosi’s Stock Trades” and “Warren Buffett Stock Tracker” ones.

Yes, the information is outdated by a few months in some cases, but it’s one of the only sources of info on what the most well-connected of the well-connected are up to.

To rip the Band-Aid off, our people of influence are crooks, benefiting from relationships to gain alpha over the rest of us.

Funds and professional traders spent hundreds of millions on advanced computers and move mere feet away from the settlement houses to gain an even further leg up on the common man.

And while people have joked about starting $PLSI and similar ETFs to track these trades, there really hasn’t been a great way to directly follow and trade the transactions of the in-the-know elites.

Further, over 80% of millennials and Gen Z get their financial information from social media… if kids are already going to religiously listen to FinTok anyways, might as well make that experience as safe and pleasant as possible.

THE SOLUTION

Premium subscribers include investors and YC-backed founders looking to stay ahead of the latest startup news.

THE NUMBERS

Traction:

Despite being a relatively new entrant in the social trading app space, Parrot Finance has already...

  • gone through Techstars, had a Seed round led by Stella Capital, raised a Pre-seed with Lightspeed, Plug and Play, Hustle Fund, and Harlem Capital

  • amassed > 2K IG followers

Market Size:

  • TAM: $2.43 billion

  • SAM: $1.70 billion

  • SOM: $85 million

Competition:

  • Autopilot, Zulutrade, eToro

  • Trading 212, Public.com, M1 Finance

  • Robinhood, Acorns, Betterment

Team:

Risks:

  • Saturation: Parrot is parroting numerous social investing platforms that have come before it, namely Autopilot, making me wonder how they plan to differentiate and succeed where others have struggled

  • Regulation: You know who won’t like this platform? The same politicians who are being tracked on the platform. Don’t expect them to get many favors from regulators who are “protecting investors”

  • Margins: Regardless of the revenue stream, they will be working with small points of relatively small transactions as Robinhood has made the days of commission on trades obsolete

What I like:

  • Creator economy: I’m a broken record, but very bullish on the creator economy, and though we’ve seen some influencers gain a following for their “hot stock picks,” I still think this is a very underutilized space

  • Potential Monetization Streams: They don’t charge commissions on the trade, but they can charge for user data, subscription fees, premium tiers, commissions, etc

  • Interest in influential figure activity: People eat this shit up, as evidenced by the following that some of the Stock Tracker accounts have built up

Opportunities:

  • Content Engine: If you’re in consumer, you need to be pumping out content like nobody’s business. As a social trading app, Parrot Finance has the potential to produce everything from education and resources to tracking certain traders and posting leaderboards. Bonus points for leveraging influencers for some UGC

  • Add Influential Figures: Admittedly, I’m a bit bearish on social trading as it relates to investing like your dumbass friends, but trade like Mitch McConnell? Trade like Elon? Sign me up

  • Partnerships with Brokerage Services: Ads are an option, but even better, find a brokerage (or multiple) that are hungry for that Gen Z audience, and work with them to cross-promote the other’s offering

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