Power to the internet people: How Redditors rocked Wall Street

Embargoed until: Publicly released: 2022-04-06 09:01

International

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At the start of 2021, masses of Redditors invested in video game retailer GameStop to cause a surge in the company's share price, and international researchers say all it took was a small number of committed people to start the cascade. The team found that a small group of Reddit users agreed to the concept in finance sections of the website, which spread out into central positions on the front page of the site, and eventually snowballed into the real world. They suggest we'll probably see more of these 'retail investors' in the future, and it is likely that social media will again affect the financial world.

Media release

From: The Royal Society

From Reddit to Wall Street: The role of committed minorities in financial collective action

In January 2021, masses of retail investors coordinated on Reddit to cause a surge in the GameStop share price, completing the first successful financial collective action. We show that the commitment of users in the online discussion predated the initial price increase, yet the importance of early investors decreased when the social identity of the broader Reddit community grew. As the role of retail investors is expected to grow in the future, our findings shed light on how these crowds can coordinate on social media to impact the financial world.

Journal/
conference: Royal Society Open Science

Research:Paper

Organisation/s: Bocconi University, Italy

Funder: No funding has been received for this article.

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