Emotions and stock returns during the GameStop bubble

Adrian Fernandez‐Perez, Ivan Indriawan and Marta Khomyn

The Financial Review, 2025, vol. 60, issue 3, 1063-1084

Abstract: We examine the relationship between investors’ emotions and GameStop (GME) stock returns during the price bubble of January–February 2021. Analyzing eight basic emotions (anger, anticipation, disgust, fear, joy, sadness, surprise, and trust) from Plutchik's (1980) Wheel of Emotions, we use textual analysis of Reddit posts to find that fear strongly predicts intraday returns and volume order imbalance. The predictive relationship between emotion and returns shifts over time: joy is strongest before the bubble peaks, fear at the peak, and anger after the bubble bursts. These findings highlight the psychological factors influencing trading behavior during stock market bubbles.

Date: 2025
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