A new army of social media-enabled day traders is helping to push stocks to record highs and turning companies into market sensations.
As trading by individual investors grew during the coronavirus pandemic, so did the popularity of the online communities where they met. Platforms including TikTok, Twitter, YouTube, Reddit, Instagram, Facebook and the Discord messaging platform have become the new Wall Street trading desks. Individual investors come together to talk about important stocks like Tesla Inc., brag about gains and mourn losses.
These investors do more than just talk, however. They piggyback on each other’s ideas and businesses, helping to fuel the momentum that propelled some companies to triple-digit or greater earnings in 2020.
“People fall in love with [some stocks] and they go into these echo chambers, where everyone screams, like, ‘Let’s buy Tesla forever!’ ”Said Blake Bassett, a 31-year-old delivery man who started to negotiate several years ago. “People post all day like it’s a football game.”
And while online discussions among investors are not necessarily new – in the late 1990s, chat rooms dedicated to stocks helped to sustain the technology stock bubble – social media is more widespread than ever. This, however, coincided with a shift across the industry to commission-free trading, while most brokers made it easier to get involved in risky instruments like options.