Synchronous social media and the stock market

Chaehyun Pyun

Journal of Financial Markets, 2024, vol. 70, issue C

Abstract: I examine stock discussions from real-time (synchronous) group chats on Discord and compare them with forum-style (asynchronous) postings on Reddit’s WallStreetBets. Findings suggest that popular stocks on Discord include fewer ”meme” stocks and are more diverse and profitable. A Discord-based long-short strategy outperforms several comparable strategies. Discord-based popularity predicts future trading volume, volatility, and returns, and this effect is stronger for smaller stocks. By contrast, popularity on WallStreetBets or on both platforms correlates with lower returns. Results suggest that academicians and practitioners should consider social interaction settings when evaluating the impact of social media on investment decisions.

Keywords: Synchronous discussions; Social media–savvy investors; Discord; WallStreetBets (search for similar items in EconPapers)
JEL-codes: G11 G12 G41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:70:y:2024:i:c:s1386418124000338

DOI: 10.1016/j.finmar.2024.100915

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