Public App – What to Know Before You Start Investing | NextAdvisor with TIME

· Public says it wants to build a community around the stock market, letting users keep track of other users' stock portfolios. All portfolios are 

The recent GameStop saga has certainly made a lot more people aware of the stock market. What was fundamentally a battle between large institutional investors and many small individual ones, organized mostly around a forum on Reddit, has morphed into what seems an age-defining moment. Wall Street, according to one dominant narrative of what happened with GameStop, has suddenly become democratized.

Retail investors — individuals who buy and sell stocks — now account for almost one-third of market activity. Should you be one of them? Has investing in stocks truly become for everyone?

This democratizing trend — giving people the power to invest on their own rather than through institutions — has been happening since the dot-com boom of two decades ago, when “day traders” began buying and selling stocks on the internet to profit in the short term. Now, you don’t even need a computer. A smartphone and an investing app are enough to get in on the action.

You may have heard of Robinhood, an app that popularized stock trading as an easy, everyday activity — too easy, in fact, according to NextAdvisor contributing editor Farnoosh Torabi, who advises treating Robinhood like a fun diversion, not a way to invest for the future.

Robinhood isn’t the only game in town, though. One of its competitors is an app called Public, which calls itself an “investing social platform” and has the backing of some pretty big names.

We’re going to take a closer look at what Public does, and how.

Public, which launched in 2019, says it has just hit a million users and that it has raised $310 million from investors. Those include Accel and Greycroft, two venture capital funds that previously backed Venmo, as well as pro skater Tony Hawk and Mantis, a fund owned by The Chainsmokers, two DJs who are number 21 on the Forbes list of highest-earning celebrities (and the highest-paid DJs in the world, at least pre-pandemic.)

Public says it wants to build a community around the stock market, letting users keep track of other users’ stock portfolios. All portfolios are public by default, but never show how much money users have invested, lost, or gained in any given stock.

“The stock market has been so exclusive to certain types of people because it was not really approachable,” co-CEO Jannick Malling says in an interview with NextAdvisor. “What the social layer does is help users curate their own experience and do so in a way that they’re used to — a social app.”

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Public doesn’t charge a fee to join or trade, nor does it require a minimum investment. Users can invest in individual stocks or Exchange Traded Funds, commonly known as ETFs. (Similarly to stocks, ETFs trade on an exchange, such as the NASDAQ or New York Stock Exchange.)

An interesting feature is that Public suggests investments based on themes, as well as user preferences and insights from fellow users.

For example, there’s a “Stay at Home” theme which includes companies such as Peloton, Slack and Amazon, whose shares have skyrocketed during the pandemic. You can then click on a given company to open a profile which will list further financial information to help you determine if you want to invest.

All company profiles include the usual info you’d find on any financial news site: stock price over time, company information and recent news, and analyst ratings, grouped under the heading “What Wall Street Thinks.” This is an aggregate rating based on analysts’ research, following the classic Wall Street model along a scale: strong buy, buy, hold, sell, or strong sell.

At the very end of a given company’s profile, you’ll see recent activity like buying and selling from other users, if they opted to make that public. It won’t say how much money users have lost or gained, though, only percentages. Similarly, you can browse other members’ portfolios, but you can’t see how much they invested in a given stock.

When you purchase or sell a stock, you can opt to make the information public so that is shown in the aforementioned feed, or keep it private.

The interface shows users a social feed that looks like what you’d find on platforms such as Instagram. Your feed will be curated based on people you follow and what you are interested in. There is also a section for globally “trending” posts.

According to Malling, the app is “powerful because it provides diversity of thought.”

Many of the thoughts in question come from notable celebrities and other public figures, including Shaquille O’Neal and Adrian Grenier (the latter is also an investor in the app.) But they don’t use the term “influencer” at Public — “the community is not about influencing,” Malling says.

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To join, you’ll need to provide your legal name, address, Social Security number and brokerage account (an account with a bank or financial institution that gives access to the stock market) to verify your identity. In essence, everyone on the app is “verified.”

It will also ask you what your goals are — for example, secondary income or preserving your savings — as well as how much investing experience you have. Once you connect to your bank, you can pick your interests to help personalize your feed, as shown here. This is different from Public’s “themes” since it aims to show you companies according to what you want to see, not according to what’s in a pre-arranged group of companies.

Humphrey Yang, who coaches his 1.4 million followers on TikTok as @HumphreyTalks (and 71,000 subscribers on YouTube) on financial and investing topics, says he’s a fan of investment apps in general “because they allow access to investing and purchasing of securities that were only offered through full-service brokerages before.”

But investing in the stock market — no matter the platform — comes with the risk of losing money. Last year, Public added “Safety Labels” to some of the more risky investments you might come across. This can include companies that recently filed for bankruptcy or companies with a market capitalization — the cumulative value of all their shares at a given time — below $300 million.

And while Public prides itself on being a “social” app, its biggest draw can also be its biggest downfall: Taking financial advice from strangers on the Internet. While the community aspect can provide valuable insights from other Public members, those insights can prove to be incorrect at any time.

Tori Dunlap, a financial coach known as @HerFirst100K on TikTok, praises Public’s social approach and the goal to democratize investing. But “if you’re bringing people in who are uneducated, it’s your responsibility to educate them,” she says — adding, however, that she thinks Public is doing a better job of educating users than competitors such as Robinhood. (“Part of me worries that Robinhood is profiting off these younger and potentially less-experienced investors who lack the literacy and, frankly, the restraint, to invest wisely,” is how Torabi put it.)

Investment apps can be “dangerous in the hands of someone who may not be well-versed in trading or investing,” Yang says.

There’s no minimum to start investing, though; you can start with $1. That’s almost never enough money to buy a share, so Public lets users buy and sell fractions of shares, which it calls “slices,” as well as full shares.

New users start with a free slice, from a selection of nine companies including Amazon, Peloton and Disney. You can cash out after 90 days if the share you own a slice of has risen in price, or you can reinvest the gains in other stocks.

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This all begs the question: How does Public make money?

The company says it has three ways it earns money. Public lends shares to short sellers, who make money by betting the price of something will drop. They then buy it back at a lower price, and make money on that price difference. The company also makes money via interest on uninvested cash balances in the app. In February, it also introduced an option for users to tip whenever they make a trade.

While the company doesn’t charge any subscription fees now, it may introduce paid-for premium features in the future.

The app has a 4.7 out of 5 rating from 5,400 users on Apple’s App Store, although there are some caveats. Some have complained that it’s difficult to reach a real person on the phone if you have a customer service issue, or that they get “incessant” notifications from the app.

40% of its users are women and more than 70% are long-term investors, co-CEO Leif Abraham says, rather than people who want to make money quickly. (Public says it does “not encourage” the practice known as day trading. The company warns that members who buy and sell a stock on the same business day will receive a warning the first three times they do it, and may have their account restricted upon the fourth.)

Apps like Public are alluring because it’s easy to see people succeed on these apps, but as Dunlap notes, “just because somebody else is doing it, doesn’t mean you have to.” There’s nothing wrong with putting your money in a high-yield savings account or CD if you aren’t comfortable investing, especially if you have a short-term financial goal.

You should not treat an app like Public or its competitors like Robinhood or Webull as your main investment vehicle; consider them more like a fun side project that could make you money, but would not cripple your financial plan. Whatever your goals for investing, you should set them out clearly before starting to build an investment portfolio.

But if you’re committed to dipping a toe into the world of investing, Public could be worth considering. Beginners in particular may like the app for its ease of use as well as the social aspect, providing another helpful layer to decode complexities in investing. If you’re looking to start investing but aren’t exactly sure what to do next, putting a small amount of money into Public may just be your starting point.

After this story was published, Public let us know that it no longer makes money from payments for routing orders on the stock market, and has introduced an option for users to tip.

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