The Reddit revolt: GameStop and the impact of social media on institutional investors
Annabel Smith, 13 April 2021
The Reddit revolution in the US has drawn attention to the potential power that a growing force of retail investors can wield in stock markets when equipped by social media.
Amateur investors have increasingly engaged with retail platforms in the last year, partly due to the pandemic leaving them idol at home, but also due to the newfound onslaught of information through social media and access to the market through retail brokerages and platforms such as Robinhood.
Set up in 2013 the mobile trading app, now valued at $21 billion and proclaimed to be democratising finance, offers investors access to the financial markets with zero commissions.
“For the largest online brokers, the number of daily trades has tripled since 2019,” John Marshall, head of derivatives research at Goldman Sachs, commented on a retail investment podcast from the US bank. “But this has mainly been driven by a small portion of their customer base. These day traders are less than 10% of their customers, but they represent more than half of their trades.”
