1. Place Your Bets? The Value of Investment Research on Reddit's Wallstreetbets.
- Author
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Bradley, Daniel, Hanousek, Jan, Jame, Russell, and Xiao, Zicheng
- Subjects
STOCK price forecasting ,INVESTMENTS ,INDIVIDUAL investors ,DUE diligence ,INTERNET forums ,RETAIL industry - Abstract
We examine the value of due diligence recommendations on Reddit's Wallstreetbets (WSB) platform. Before the Gamestop (GME) short squeeze, recommendations are significant predictors of returns and cash-flow news. This predictability is eliminated post-GME. Post-GME, the fraction of reports emphasizing price-pressure or attention-grabbing stocks dramatically increases, and the decline in informativeness is concentrated in these reports. Similarly, retail trade informativeness is particularly strong following DD reports in the pre-GME period, but not post-GME. Our findings are consistent with the view that the Gamestop event altered the culture of WSB , leading to a deterioration in investment quality that adversely affected smaller investors. [ABSTRACT FROM AUTHOR]
- Published
- 2024
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