Investors Get Stock Picks on Social Media
This week, we talk about how online communities on TikTok and other sites are lifting stocks up.
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Hi, Maitane! 2020 was a banner year for stocks, especially favorites like Tesla, which has surged 748% over the past 12 months. Helping push stocks up is a new generation of traders that get ideas on what to buy from online chatter.
Online chat rooms aren’t anything new to the stock market. They helped spur the dot-com bubble of the late 1990s. Now we are seeing traders as young as teenagers who scroll TikTok, YouTube, Facebook and Instagram for hours to find stocks to buy.
It isn’t easy to tell how much online chatter drives the ebbs and flows of stocks. Some researchers say individual investors have the most impact on smaller, more speculative stocks.
For Chinese electric car maker Nio, whose battery-swapping business we talked about last week, one analysis of trading app Robinhood in August found that users seemed to be chasing Nio’s gains rather than driving them. Nio has seen its stock soar, overtaking the market value of General Motors.
What is clear is that online communities dedicated to trading grew considerably last year after many people lost their jobs due to the coronavirus pandemic. As of January, posts with the #stockmarket hashtag drew more than 800 million views on TikTok, more than triple the total as of June. StockTwits, a social network for traders, saw its users more than triple over the past year.
2020 was a busy year, with many companies going public across all regions, especially during the second half of the year. Footwear brand Dr. Martens is readying for an IPO on the London Stock Exchange this year.
Investors may soon be able to own a slice of the iconic bootmaker. Dr. Martens is owned by private equity group Permira, which bought it for $464 million in 2014 and plans to float at least 25% of the company, according to a filing. The British brand sells 11 million pairs of shoes in more than 60 countries every year and said its online sales and total sales have grown during the pandemic.
What is an IPO? In an initial public offering, a company’s shares get listed in the stock market for the first time. Going public allows companies to raise a lot of money so they can grow and expand. It also gives investors who are interested in the company the opportunity to buy shares and earn returns. The most common way for individual investors to invest in newly-listed companies is to place an order with their broker to purchase shares in the days following the IPO. Last year, we saw some high-profile listings, including home-rental company Airbnb and food delivery service Doordash. Cloud-data management company Snowflake broke a record by doubling its value on its first day of trading to $70.4 billion.
We’ll keep an eye on what 2021 has in store for IPOs. Share your thoughts below, email us or catch us on Twitter. Happy holidays and remember to wash your hands.👋
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Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music, skateboarding and yoga (but I’m bad at both). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardonmaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com@violian.tammy
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