A new army of day-trading traders activated on social media helps push stocks to records and turn companies into market sensations.
As trading by individual investors flourished during the coronavirus pandemic, the popularity of online communities where they meet also increased. Platforms, including TikTok, Twitter, YouTube, Reddit, Instagram, Facebook and the messaging platform Discord, have become the new Wall Street commercial banks. Individual investors gather around hot stocks like Tesla Inc. to speak, boast of gains and contemplate their losses.
However, these investors do more than just talk. They help each other’s ideas and industries and help boost the momentum some companies have to three-digit or larger profits in 2020.
‘People fall in love with [some stocks] and they come into these echo chambers, where they all shout, like, ‘We’ll buy Tesla forever!’ ‘said Blake Bassett, a 31-year-old delivery manager who started trading several years ago. “People post all day as if it were a football game.”
And while online discussions among investors are not necessarily new – in the late 1990s, the Internet chat rooms dedicated to equities kept the technological stock bubble afloat, social media being more widespread than ever before. This, meanwhile, coincided with an industry-wide move to commission-free trading, while most brokers made it easier to think of risky instruments such as options.