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- In our first foray into the world of unstructured data, we look into Reddit, in particular the WallStreetBets sub-reddit, to see if the data can be used to inform stock selection.
- While the total number of mentions on WallStreetBets is large, mentions tend to concentrate among the most popular stocks.
- Our Reddit Alert List includes stocks with an uptick in mentions on WallStreetBets combined with unusual trading activity. After being added to the list, stocks tend to underperform for holding periods out to 21 days.
Making Sense of the Reddit RevolutionThere is the headline, and then there is the truth. One is a simple soundbite, while the other is a complicated and nuanced maze of thoughtful consideration. In January 2021, many in the news media proclaimed that retail investors had done the impossible and dethroned the Wall Street institutional elite. For a few weeks, it appeared that a genuine retail investor revolution was occurring on Wall Street. Retail investors identified institutional short positions in a company beloved to many millennials called GameStop. As retail investors started talking up the stock on a Reddit group called WallStreetBets, GameStop saw its price appreciate 2,265% in about ...