We Reddit in a Forum: The Influence of Messaging Boards on Firm Stability

Corbet, Shaen; Hou, Greg; Hu, Yang; Oxley, Les

doi:10.2139/ssrn.3776445

Cited by 5 publications

(6 citation statements)

References 48 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The early 2021 developments of meme stocks, such as GameStop, strongly support these criticisms of the Efficient Market Hypothesis (for more, see Libich & Lenten, 2021). The contribution by Corbet et al (2021) shows how social media (such as the Reddit "wallstreetbets" forum) have played "a significant role in disrupting market functionality. "…”

Section: Market Efficiency and Liquiditymentioning

confidence: 99%

See 1 more Smart Citation

Hero or villain? The financial system in the 21st century

Libich

Lenten

2021

Journal of Economic Surveys

View full text Add to dashboard Cite

The paper reviews the literature and data on the role of finance in socioeconomic development. The evidence suggests that a well-developed financial system can certainly enhance people's prosperity, but an excessively large and poorly regulated financial system can do more harm than good. We start by making the important distinction between traditional finance (retail banking, insurance, etc.) and modern finance (financial "innovation" and asset trading). We then document that the financialization trend of the past four decades has largely transformed modern finance from "hero" into "villain." We discuss the driving forces behind this, as well as some policy reform proposals that could in principle make modern finance a hero once again.

show abstract

Section: Market Efficiency and Liquiditymentioning

confidence: 99%

“…The contribution by Corbet et al. (2021) shows how social media (such as the Reddit “wallstreetbets” forum) have played “a significant role in disrupting market functionality.”…”

Section: Modern Finance: the Villain Sidementioning

confidence: 99%

Hero or villain? The financial system in the 21st century

Libich

Lenten

2021

Journal of Economic Surveys

View full text Add to dashboard Cite

show abstract

“…There have already been some analyses of the Robinhood/GameStop experience that are related to ours. Corbet et al (2021) examined Reddit posts around the GameStop situation to examine possible stock price manipulation. Umar et al (2021b) examined fundamentals sentiment for GameStop but used Twitter data as a proxy for sentiment.…”

Section: Introductionmentioning

confidence: 99%

“…In early 2021, shares in the American video game retailer GameStop surged more than 700% in 1 week following the speculative involvement of individual investors, a move touted as investors piling in to buy stock they like. The “to the moon” movement coordinated on the r/WallStreetBets subreddit during the GameStop share rally provides an opportunity to add to the literature on the market impact of online discussion on investment forums (Cookson & Niessner, 2019; Corbet et al., 2021; Renault, 2017). The impact of investment sentiments extracted from Reddit on stock prices is a particularly interesting topic for textual analysis since investors create the content of the forums and influence each other rather than reacting to any published news.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

“I just like the stock”: The role of Reddit sentiment in the GameStop share rally

Long

Xie

Yarovaya

2022

The Financial Review

View full text Add to dashboard Cite

This paper investigates the role played by the social media platform Reddit in the events around the GameStop (GME) share rally in early 2021. In particular, we analyze the impact of discussions on the r/WallStreetBets subreddit on the price dynamics of the American online retailer GameStop.We customize a sentiment analysis dictionary for Reddit platform users based on the Valence Aware Dictionary and Sentiment Reasoner (VADER) sentiment analysis package and perform textual analysis on 10.8 million comments. The analysis of the relationships between Reddit sentiments and 1-, 5-, 10-, and 30-min GameStop returns contribute to the growing body of literature on "meme stocks" and the impact of discussions on investment forums on intraday stock price movements.

show abstract

Financial recommendations on Reddit, stock returns and cumulative prospect theory

Reichenbach

Walther

2023

Digit Finance

View full text Add to dashboard Cite

This study investigates stock recommendations from the three largest finance subreddits on Reddit: wallstreetbets, investing and stocks. A simple strategy that buys recommended stocks weighted by the number of posts per day yields a portfolio with higher average returns at the expense of higher risks than the market for all holding periods, i.e., unfavorable Sharpe ratios. Furthermore, the strategy leads to positive (insignificant) short-term and negative (significant) long-term alphas when considering common risk factors. This is consistent with the idea of “meme stocks”, meaning that the recommended stocks are artificially inflated in the short term when they are recommended, and that the posts contain no information about long-term success. However, it is likely that Reddit users, especially on the subreddit wallstreetbets, have preferences for bets which are not captured by the mean–variance framework. Therefore, we draw on cumulative prospect theory (CPT). We find that the CPT-valuations of the Reddit portfolio exceed those of the market, which may explain the persistent attractiveness for investors to follow social media stock recommendations despite the unfavorable risk-return ratio.

show abstract

We Reddit in a Forum: The Influence of Messaging Boards on Firm Stability

Cited by 5 publications

References 48 publications

Hero or villain? The financial system in the 21st century

Hero or villain? The financial system in the 21st century

“I just like the stock”: The role of Reddit sentiment in the GameStop share rally

Financial recommendations on Reddit, stock returns and cumulative prospect theory

Contact Info

Product

Resources

About