Coming to a retailer near you -- it's the stock market.
That's the plan if companies like Stockpile have their way. The Silicon Valley fintech firm is literally bringing stock trading to the local grocer or toy store by offering equity gift cards.
They're much like those offering $25 worth of food at The Cheesecake Factory (CAKE), or $150 in merchandise via Amazon (AMZN). The difference is theirs will offer small stakes in companies like Apple (AAPL), Google-parent Alphabet (GOOGL) or Facebook (FB) -- as well as the likes of Cheesecake Factory or Amazon. You could say Main Street actually is converging with Wall Street.
Stockpile's aim is to "democratize" the market, and open it to the average Joe. The company hopes to appeal to consumers' desire to get in on what very few Americans do right now: buy stakes in Corporate America in order to save, invest and prepare for large expenses later on in life such as college educations, weddings and ultimately retirement.
"Eighty-six percent of the population have never owned stock, but 93% have had gift cards pass through their hands," said Dan Schatt, Stockpile's chief commercial officer.
Consumers simply buy the gift card at the checkout stand. Once the card is paid for, a redemption code is entered digitally with Stockpile and consumers then call or go online to register their investment.
The key to what Stockpile proposes, and what other brokers like it are offering, is "fractional" shares in stock. Instead of paying, say, the 99.43 that was Thursday's closing price for a single share of Apple, consumers could pay a convenient $25 for part of a share, or $150 for an entire share and part of another.
Stockpile spent several years ironing out the details on being able to offer partial shares of companies with the Financial Industry Regulatory Authority and the Securities and Exchange Commission, Schatt said.
It now can offer stakes in more than 1,000 stocks and exchange traded funds. For those who can't afford the $750-plus for a full share of Alphabet, they can still get in on the parent of the world's top search engine.
In case you're wondering, Stockpile has yet to offer stakes in hyper-expensive Berkshire Hathaway (BRKA) (BRKB) Class "A" shares because they now go for more than $215,000 a pop and Stockpile has to hold on to whatever portions of shares aren't sold. But partial stakes in $145 Berkshire "B" shares are readily available.
The concept of offering fractional shares is not new. Like Stockpile, San Mateo, Calif.-based Motif Investing is an online broker and offers piecemeal stakes in companies.
Motif isn't making a permanent move into the retail space with gift cards like Stockpile, though it has had promotions in the past. Instead, it offers stakes in what could be described as minifunds based around any one of 200,000 themes -- along with stakes in individual equities if one so desires. Customers can even make up their own "motif," or fund that suits their investing choices.
"We want people to build portfolios around their insights," said Hardeep Walia, Motif's chief executive.
He adds that what differentiates his product from Stockpile and other fractional share brokers is that investors are making what he calls "real-time" investments. That is, investors know the exact price of a stock at the moment they make their purchase.
Stockpile says that once a recipient of a stock gift card goes online or phones in to register the card's code, they've committed to buying the stock. The purchase price, however, is where the stock finishes at the end of the next market close. But recipients can opt for another stock when they call in if they're unsure about the one listed on the card.
Stockpile, which was founded in 2010, began offering its stock gift cards in October and already demand has blossomed, Schatt says. Cards now are available at 400 retail outlets.
They include publicly traded outlets such as Office Depot (ODP) and its OfficeMax stores, Sears Holdings' (SHLD) Kmart stores and Minnesota-based grocer SuperValu (SVU), along with privately held Safeway, Wegman's and Giant Eagle. But it won't stop there.
The company plans to expand to 14,000 retail outlets by September. Schatt says a number of big-name retailers will be included, though the company isn't disclosing now who they are. It's venturing into such outlets as privately held Toys R Us, and hopes to someday entice consumers by, say, positioning Coca-Cola (KO) stock gift cards next to Coke six-packs on the soda aisle.
Stockpile also offers regular online brokerage services. One benefit of offering consumer-oriented investments is that Stockpile is picking up a demographic not normally associated with stock investing. Half its account base is under 30 years old and 20% of that is made up of teenagers. (Those under 18 can maintain investments under the supervision of a parent or guardian.)
"That's sort of unheard of in the brokerage world," Schatt said.
