Work

Robinhood, Reddit, and the news: The impact of traditional and social media on retail investor trading

Year: 2024

Type: article

Abstract: We study the impact of social media posts and news articles on retail trading on Robinhood by analyzing the net buying activity before and after a (social) media publication. Our findings indicate that both publication types lead to an increase of holders. However, both effects are short-lived, and the effect of social media posts on retail trading is significantly higher. Furthermore, investors buy stocks that are recommended on Reddit regardless of text sentiment. However, they act as contrarians by selling stocks with positive news coverage and vice versa. We thus find evidence for both attention- and information-driven trading behavior.

Source: Journal of Financial Markets

DOI: 10.1016/j.finmar.2024.100929

Authors: Markus Münster, Felix Reichenbach, Martin Walther

Institution: Technische Universität Berlin

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,860

OpenAlex ID: W4400448997

FWCI: 11.08

Cites: 43

Cited by: 31

Related to: 10