Social media groups such as the Wallstreetbets in Reddit social media platforms have disrupted Wall streets. Indeed, the democratization of stock trading has drastically shifted the balance of power in the industry. Actually, a combination of easy-to-use trading platforms and social media platforms are putting the power in the hands of the public. Wallstreetbets chat room with its massive following is just one of the many out there.
Certainly, today hedge funds and traders are under pressure from social media traders. Typically a social media trader is a retail trader that follows social media influencers rather than traditional financial fundamentals. In addition, they rely on social media groups and online communities for support. Most likely, their primary drive is aspiration, not greed.
Literally, the phenomenon is increasingly challenging wall street. Meanwhile, companies are noticing. I wouldn’t be surprised if in the nearest future some struggling companies decide to take advantage of the new trend in a bid for salvation. Surely, hedge fund managers need to take into account the entrance of new competition. More than ever before collective power of those new traders is signaling a new reality in the industry.
But broadly, this is part of a new dynamic among many where investing in the stock market is more important than buying a house. As a result of that enthusiasm, some companies enjoy higher market valuations.