A new army of social media day traders helps push stocks to record and turn companies into market sensations.
As trading by individual investors increased during the coronavirus pandemic, so did the popularity of the online communities where it gathers. The platforms, including TikTok, Twitter, YouTube, Reddit, Instagram, Facebook and the Discord messaging platform have become the new trading offices on Wall Street. Individual investors gather to talk about hot stocks, such as Tesla Inc., brag about gains and are confident about losses.
However, these investors do more than just talk. They are based on mutual ideas and transactions, helping to boost the momentum that has driven some companies to earn three-figure or higher in 2020.
“People fall in love with [some stocks] and enters these echo chambers, where everyone shouts, like, “We’ll buy Tesla forever!” Said Blake Bassett, a 31-year-old delivery driver who started trading a few years ago. “People post all day like it’s a football game.”
And while online discussions between investors aren’t necessarily new – in the late 1990s, stock chat rooms helped support the tech stock bubble – social media is more widespread than ever. In the meantime, this has coincided with an industry-wide move to commission-free trading, while most brokerages have made it easier to deal with risky instruments such as options.