(BFM Bourse) – Investing in the stock market is a popular theme on social networks like Tiktok or Instagram. And the flagship stocks of the S&P 500 are, unsurprisingly, the most commented on on these social networks.
Last week, Gamestop and AMC experienced a violent buying surge, with individual investors joining forces on social platforms, such as Reddit, to boost their massacred prices.
A scent of 2021 was therefore floating on the markets last week. It was also in 2021 that the New York company Vaneck launched an ETF, i.e. a listed index fund, composed of securities of companies creating the “buzz” on social networks, of -Twitter, to Reddit. The timing of the launch of this ETF above all suggested that it was designed in reaction to the frenzy that gripped these “meme stocks”.
Between two videos or photos of cats, the Stock Market therefore finds an echo on social networks. This is also the main lesson from a study by the Plus500 broker. The latter scrutinized each company listed on the American S&P 500 index by analyzing the volume of content generated and the corresponding views on Tiktok and Instagram.
Subsequently, stock prices were compared between January 3, 2023 and April 8, 2024, to assess the performance of S&P 500 stocks favored by traders on Tiktok and Instagram. To determine the enthusiasm of social networks around a title, two hashtags were analyzed for each company: #companystock and #companyshares. The most common name of each company was used if it differed from the official title.
Furthermore, to establish the total score of the American stocks which are the subject of the greatest hype on social networks, three criteria were retained. The raw data for each criteria was cleaned, verified and normalized to the same scale of 0 to 10, where 0 and 10 represent the worst and best values present in the data, to allow an accurate comparison between the criteria.
Then a weighting was then assigned to each criterion, reflecting its importance in the analysis. The factors and their percentage weightings are as follows: the number of posts on Instagram counts for 20%, the number of views on Tiktok weighs for 60% while the number of videos on Tiktok also counts for 20%.
Once the weightings were defined, the total score of the criteria was calculated, which made it possible to obtain an overall index out of 100 for each company, on which the final ranking is based.
Tech on the podium
The top three in this ranking hardly offer any surprises. At the top of social media’s favorite S&P500 stocks is Tesla. The car manufacturer has focused the attention of traders with more than 77 million views on TikTok, and the largest number of posts on Instagram, with 44,000 posts.
On January 3, 2023, Tesla’s stock price was $108.10. The price fixed on April 8 for this study was $164.90, which reflects an increase of 52% in the stock over the period. “Therefore, if you were influenced to buy this stock in 2023, you should be sitting on a profit,” the study suggests.
In second place, social media traders favored Apple. The apple brand generated 33 million views on 2,882 messages on Tiktok. The study identified 19,000 messages on Instagram, with the introduction of Vision Pro this year, and other innovations that got people talking. From a stock market point of view, Apple shares rose from $124.22 in 2023 to $169.58 as of April 8, which represents an increase in the stock of 36% over the period of the study.
In third place is Amazon, which has proven to be a popular stock for investors, particularly on social media, since the hashtags were viewed 13 million times on 1,619 videos published. On the stock market, this enthusiasm for the e-commerce giant has paid off since the share price has jumped 115% in just over a year.
In more traditional distribution, Walmart comes in fourth place with 8.9 million views on 682 videos. The American giant is followed by Meta, which occupies fifth place in this ranking. In 2023, the group known for its multiple applications, including Instagram, launched Threads, a competitor to Elon Musk’s X, and gained 100 million users in the first week. Hashtags related to the company’s actions were seen 7.5 million times on Tiktok and 1,700 times on Instagram, recalls the Plus500 study. And on the stock market, Meta was also in sight, with a share price which experienced a dizzying rise, going from 124.61 dollars in January 2023 to 527.34 dollars in April 2024, or 323% gains over the period. .
What about Nvidia, the big winner on Wall Street in 2023 whose price has risen sharply with the enthusiasm around generative artificial intelligence? The graphics processor specialist is the most traded stock on the New York Stock Exchange, according to a Reuters study published at the end of February and is also the seventh most popular S&P 500 stock on social networks.
A new population of investors learning on the stock market
It must be said that since the health crisis, a new contingent of savers are interested in investing in the financial markets. Since the start of the year, nearly 40% of new investors arriving on the Paris stock markets are under 35 years old, according to a study by the Financial Markets Authority (AMF) published in July 2023.
These new stock market investors are also younger and get more information on social networks, especially for investors aged between 18 and 24. According to this same study, 41% cite social networks as their primary source of information, as well as influencers.
The fact remains that investment advice given online, particularly on social networks, should be taken with the greatest caution. On this subject, the AMF regularly warns about investment advice provided online and particularly on social networks.
In recent years, several influencers have promoted more or less dubious financial products, according to a formidable modus operandi, particularly among a very young population lacking financial background.
The stock market watchdog invites investors, particularly the less seasoned, to exercise the greatest vigilance and also to question the credibility of these recommendations.
Sabrina Sadgui – ©2024 BFM Bourse
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