How Online Comments affect Stock Trading - The Case of Gamestop

Forthcoming, Financial Markets and Portfolio Management

48 Pages Posted: 13 May 2021 Last revised: 14 Feb 2022

See all articles by André Betzer

André Betzer

University of Wuppertal - Schumpeter School of Business and Economics

Jan Philipp Harries

University of Wuppertal - Schumpeter School of Business and Economics

Date Written: May 10, 2021

Abstract

In January 2021, the stock price of NASDAQ-listed GameStop Corporation surged more than twenty-fold for no discernible economic reason. Many observers attributed this broadly covered rise to retail investors, organizing themselves in Reddit's Wall- StreetBets community. While Social Media-organized trading is not a new phenomenon, the magnitude of the resulting swings in the share price and surge in trading volume of GameStop is unprecedented. Using financial data, as well as an extensive dataset of Reddit posts, we provide empirical evidence for the relationship of Reddit posts and GameStop (retail) trading. While we find a significant and positive relationship between Reddit posts and various trading measures in the following 30-minute window in accordance with an attention-based mechanism, our results offer no indication for the informativeness of Reddit posts and hint at a complex and probably non-linear interdependence between Social-media and trading activity, preventing proof of a one- directional, causal effect.

Keywords: GameStop, Retail Trading, Trade Volume, Market Structure

JEL Classification: D91, G14, G41

Suggested Citation

Betzer, André and Harries, Jan Philipp, How Online Comments affect Stock Trading - The Case of Gamestop (May 10, 2021). Forthcoming, Financial Markets and Portfolio Management, Available at SSRN: https://ssrn.com/abstract=3844378 or http://dx.doi.org/10.2139/ssrn.3844378

André Betzer

University of Wuppertal - Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal
Germany

HOME PAGE: http://finance.uni-wuppertal.de/index.php?id=1153

Jan Philipp Harries (Contact Author)

University of Wuppertal - Schumpeter School of Business and Economics ( email )

Rainer-Gruenter-Str. 21
Wuppertal, 42119
Germany
3179 (Phone)

HOME PAGE: http://https://controlling.uni-wuppertal.de/de/team/jan-philipp-harries-dipl-betriebsw-dh.html

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
589
Abstract Views
1,374
rank
63,605
PlumX Metrics