More institutional investors are using Reddit to learn about investments and make investment decisions, even as they report increasingly high mistrust of the internet forum.
The Brunswick Group surveyed institutional investors about their Reddit usership in February, weeks after users on Reddit forum WallStreetBets gained notoriety for coordinating a short squeeze in GameStop and other so-called meme stocks.
Twenty-seven percent of the survey respondents said they used Reddit to investigate investment-related issues, up five percentage points from just three months earlier.
About 20 percent of institutional investors had made a trade, changed a recommendation, or altered a position because of activity originating in the WallStreetBets subreddit. Use of r/WallStreetBets was up by six percentage points compared to November, according to the Brunswick survey.
At the same time, however, the survey recorded a sharp decline in how much investors trusted Reddit as a source of information, with 54 percent of respondents giving the social media platform a score of 1 or zero out of 10. On average, investors scored Reddit as a 2 out of 10 on the trustworthiness scale, down from 3.3 in November.
Younger respondents — those under 30 — were less skeptical of Reddit, with 31 percent reporting that they trusted Reddit as an alternative to traditional media, compared to 14 percent of the total pool.
Brunswick questioned investors on Reddit in February as a follow-up to a larger survey on the digital media habits of institutional investors. The broader survey, which included 537 buy-side investment professionals and sell-side analysts globally, asked respondents about their most used and most trusted sources of online information.
Investor relations websites ranked as the top-used and most-trusted source of information, earning a trustworthiness score of 8.4. Other highly trusted sources included mainstream financial media outlets Bloomberg, the Wall Street Journal, and the Financial Times, which each earned scores of 8 to 8.2.
At the other end of the scale, the least trustworthy sources of information were social media sites such as Facebook and Instagram, which were given scores of 2.6 and 2.7, respectively. LinkedIn was seen as the most reliable social network, earning a score of 5.7 and beating some broadcast news sources, including CNN (5.4), MSNBC (5.2), and Fox News (4).
Brunswick also asked respondents to name the e-mail newsletters and podcasts they used to gather information for investment decisions. The most popular newsletter provider was the controversial finance blog Zero Hedge, which in recent years has earned a mixed reputation for publishing financial analysis and conspiracy theories. Morningstar’s newsletters were the second-most cited, followed by the Motley Fool Stock Advisor.
The top podcast was Ted Seides’ Capital Allocators, in which the ex-Protégé Partners president and Institutional Investor columnist interviews CIOs and other influential investors. Patrick O'Shaughnessy’s Invest Like the Best was the second-most popular podcast, followed by Motley Fool Money.