While the Reddit forum WallStreetBets started out as a way for mavericks to exchange tips that go against traditional investment advice, the platform soon grew to be a major player and source of authority.
Started in 2012, the subreddit surpassed one million followers shortly before the 2021 meme stock mania sent shares of AMC (AMC) and GameStop (GME) soaring. By March 2023, the community has grown to over 13.7 million followers.
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Calling themselves "degenerates," the followers exchange suggestions on how to eschew traditional investing advice and make high-risk, high-reward investments.
A Growing Number Of Investing Big Wigs Are Secretly Reading Reddit
While certain big banks and investment firms have initially looked down upon WallStreetBets (a JPMorgan analyst once called it a "chorus of pundits"), a large number are still reading it either quietly or openly.
The 2023 Digital Investor Survey from the Brunswick Group found that 58% of investors working on behalf of banks, firms or pension funds, reported getting at least some of the information they need to make a decision on whether to invest from Reddit. A further 46% expect to use the platform more in 2023 than they had in 2022.
"Platforms that have traditionally been associated with retail investors (including Reddit, and to some extent, Twitter) are gaining popularity and importance with institutional investors," the study's authors write.
The most popular subreddits are r/Investing, r/cryptocurrency and r/WallStreetBets -- 49% of those who admitted to reading the platform are subscribed to the latter. The survey calculated over 33 million conversations related to finance taking place on the site in the last year.
Of those who read Reddit, 50% considered it to be of "high importance" in evaluating a stock's performance. Other popular platforms include the Robinhood Snacks newsletter as well as the website of the company itself -- 84% of the respondents felt that it was important for a company one's investing in to have an interactive website while 43% said it's "helpful" for the CEO to have an active social media presence.
'Retail Investors In Their Personal Lives'
"This increased interest in retail investors could be a consequence of the financial fallout from popular 'meme stocks' like GameStop, AMC, and Bed Bath & Beyond (BBBY) as institutional investors look for ways to keep their pulse on the conversation among retail investors," write the Brunswick authors. "What's more, institutional investors are likely to be retail investors in their personal lives and may find their retail research habits helpful in their professional roles.
On a wider scale, Reddit is popular but not the main social media platform from which institutional investors harvest data. With 61% turning to it, Google (GOOGL) is by far the most popular while YouTube (47%), LinkedIn (45%) and Meta (META)'s Facebook (44%) are other popular sources.
Over 81% of those polled said they gather investment information from some type of social media platform while 88% have investigated a company's social media presence when deciding whether to recommend it to a client.
Both on social media and the company's main website, most are looking for easily available stock prices, quarterly and annual reports and ESG guidance.
"Our research demonstrates that investors are avid users of a broad range of social and digital platforms, with changing dynamic needs and behaviors," Brunswick partner Janelle Nowak-Santo said in a statement.
