New Investors Find Community on Social Media

Traders Chat on TikTok, Reddit, and Discord

Individual investor trading has skyrocketed during the coronavirus pandemic, and instead of meeting in person to discuss potential trades, some investors have turned to TikTok, Twitter (TWTR), Youtube (GOOGL), Reddit, Instagram (FB), and Facebook. The forums and video posts are reminiscent of the 1990s chat rooms that helped usher in the tech-stock bubble, but analysts say today’s online communities are even more powerful. Some analysts credit online forums with bringing triple-digit gains to certain companies last year.

During pandemic lockdowns, some new investors have been drawn to the community that online trading forums have provided. As unemployment and restrictions on activities continue to impact millions, many are trading for the first time as a way to make money and feel connected to others.

NIO Among Most-Searched Stocks

For illustrative purposes, let’s look at Chinese electric-car-maker NIO (NIO). On TikTok, posts tagged #nio have been viewed more than 33 million times, and NIO is also one of the most-searched stocks on Google. The company’s share-price performance for 2020 almost directly mirrors a chart of its mentions on Twitter.

At the start of 2020, NIO’s US-traded American depositary shares traded at less than $4. Last week the securities closed at a record $58.92, and NIO was the second-most-traded stock on Fidelity Investments’ retail-trading platform. The company’s market value of $92 billion is now higher than that of American auto giant General Motors (GM).

Looking for Community, Individuals Flood the #stockmarket

Some analysts believe that individual investors mainly influence smaller, speculative stocks. When it comes to NIO, some say individual interest has driven the company’s value too high, while others argue that individual investors are riding the tail of the company’s gains, not driving them.

Despite the debate, and the uncertainty about what 2021 will bring for markets, it is clear that investment momentum is building online. In January posts tagged #stockmarket on TikTok were viewed more than 800 million times—more than three times the views for similarly tagged posts three months ago.

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