Millennials And Gen Z Bet Big On The Wrong 3 Stocks

Millennials and even-younger Gen Zers don’t agree on much — other than their opinion on Baby Boomers. But they see eye-to-eye on which three S&P 500 stocks to load up on now — it’s just not working for them so far this year.




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Millennials and Gen Z both hold more of just three stocks, Tesla (TSLA), Apple (AAPL) and Amazon.com (AMZN), than any others in their portfolios, says a new analysis of first-quarter holdings data from Apex Clearing. Apex, which processes trades for brokerage firms, analyzed the top 100 stocks in more than 3 million accounts held by millennial and Gen Z investors.

Too bad it’s not working. All three stocks, due to report pivotal earnings reports this week, are lagging the S&P 500 at this point in 2021.

Seeing such agreement on S&P 500 stocks a bit of a surprise. There’s an age gap of more than a decade between these two generations. And these groups of investors are known for making twitchy moves between hot plays. So their loyalty to same large stocks is notable as all three are lagging this year so far, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

Moves these generations make are increasingly important to the stock market, though, says Apex President Tricia Rothschild. Gen Zers, who are 20 years old on average, and millennials, aged 32 on average, are jumping into stocks with both feet. New account openings jumped in the first quarter as these young investors saw opportunity.

“Retail trading has gained momentum with so many people that now have access and are coming into the market,” she said.

Tesla: Testing Millennial and Gen Z Patience

The Apex analysis shows both generations’ willingness to diverge from the world’s most popular index: The S&P 500. But it’s costing them this year.

Tesla is the very favorite holding of both millennials and Gen Z. But the electric car maker holds just a 1.6% weight in the S&P 500, ranking it sixth in the index. But Tesla stock is only up 3.4% this year so far, lagging the S&P 500’s 11.3% gain.

The stock is digesting its massive 400% rise over the past 12 months. But investors remain on the sidelines leading up the company’s pivotal first-quarter profit report on April 26. Analysts are looking for the company to make an adjusted $892.1 million, or 77 cents a share. That’s up more than 230% from the same period in 2020. Will it disappoint like it did in the fourth quarter of 2020, or blow away forecasts again like it did in the previous four quarters?

S&P 500 Laggards? Apple And Amazon

Smartphone maker Apple is another show-me S&P 500 stock millennials and Gen Z love. It’s the No. 2 most popular stock in both of their portfolios.

And yet, shares are up just 1.2%, trailing the S&P 500 by a mile this year so far. The company’s newest upgrades to its tablet computers this month didn’t light up much excitement. Investors are hoping for something more bankable, when the company reports profit on April 28. On top of seeing Apple’s quarterly profit rise an expected 55%, investors hope to hear about how it will return part of its enormous pile of $200 billion in cash and investments as stock buybacks and dividends. What should you know before Apple reports?

Lastly, the No. 3 holding of millennials and Gen Z is Amazon. And yet, it’s up just 2.6% this year. Investors are still wondering how the online retailer will still grow as the pandemic eases. Also, top notch leader Jeff Bezos just gave up the CEO post. Amazon is expected to post more than 90% adjusted profit growth when it reports first-quarter results on April 29.

Millennials, Gen Z Diverge From S&P 500

Meanwhile, both generations are relatively lukewarm on some of the year’s best mega-cap stocks versus the S&P 500. They’re underweigh two massive winners on IBD’s Leaderboard list of top stocks.

IBD Long-Term Leader Microsoft (MSFT) is the S&P 500’s No. 2 holding at 5.5% of the index. But it’s only the ninth most popular holding with Gen Zers and just eighth with millennials. But it has soared more than 17% this year already. It’s only a hair from becoming the second $2 trillion company.

Similarly, Google holding company Alphabet (GOOGL) is the fourth largest holding the S&P 500. It’s 3.8% of the index. And yet, Alphabet is low on Gen Z and millennials’ lists. It’s only the 20th most popular holding for Gen Z and just 21 for millennials. And it’s doing even better still: up 32.2% this year. It carries a near-perfect 97 IBD Composite Rating.

Several other of the stocks most popular with millennials and Gen Zers, too, don’t even appear in the S&P 500. Meme stock, GameStop (GME), is a top five holding of both generations. But it’s not in the S&P 500, only the S&P SmallCap 600. GameStop shares have sunk roughly 20% in a month, while it is up big on the year. And China’s Tesla, Nio (NIO), is also in the top five spots of millennials and Gen Zers, but not in the S&P 500. And it’s down 15% this year so far.

Perhaps Tesla, Apple and Amazon.com will perk up following earnings this week? Millennials and Gen Z are certainly betting on it. The now unfolding earnings season, though, could show if their faith is well founded. Many young eyes will be watching.

Top Holdings Of Millennial and Gen Z Investors

Popularity rank with millennials Popularity rank with Gen Z Company Symbol Stock % since Q1 2021 Sector Composite Rating
1 1 Tesla (TSLA) 3.4% Consumer Discretionary 94
2 2 Apple (AAPL) 1.2% Information Technology 75
3 3 Amazon.com (AMZN) 2.6% Consumer Discretionary 77
4 5 NIO (NIO) -15.7% Consumer Discretionary 62
5 4 GameStop (GME) 702.4% Consumer Discretionary 60
6 7 Palantir Technologies (PLTR) -0.6% Information Technology 30
7 6 AMC Entertainment Holdings (AMC) 379.2% Communication Services 46
8 9 Microsoft (MSFT) 17.4% Information Technology 89
9 8 Walt Disney (DIS) 1.0% Communication Services 35
10 14 Facebook (FB) 10.2% Communication Services 94
S&P 500 11.3%
Sources: IBD, S&P Global Market Intelligence, Apex Clearing, holdings through March 31, YTD stock % ch. through April 23

Follow Matt Krantz on Twitter @mattkrantz

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