Robinhood Rescuing The Rich?
While the stock market is typically talked about every weekday for daily updates, it’s especially caught plenty of attention this week.
Stock prices for gaming store GameStop soared this week, after a series of events. The stock went from less than $5 in value to more than $350 this week, an increase of more than 1,800 percent. And on Thursday, the trading app Robinhood restricted sales of the stock, citing ‘volatility’ and causing plenty of backlash online.
It all started when some investors short-sold or bet against GameStop stock. This means they borrowed the company’s shares to sell them and buy them back later at a cheaper price to reap the margin. Users on Reddit became keen to the practice and bought GameStop stock in huge quantities, which drove up the stock price and forced the investors who had attempted to short-sell the stock, to buy back it back at a much higher price, costing those investors billions of dollars.
Arguably under pressure from investors, Robinhood ceased sales of GameStop stock on Thursday. While politicians have condemned the move, it also resulted in a class-action lawsuit by Robinhood customers.
To get a sense of where the online chatter is, we’ve conducted a pair of searches using Social Studio in the Adam Brown Social Media Command Center. The first search simply uses the keywords “GameStop” and “stock.” While this is by no means an exhaustive search, it is an attempt to limit findings to posts only concerning the company and the stock prices this week.
This search found more than 751,000 posts across social media, including Twitter, YouTube, message board forums and comment sections on various media as of 2:30 pm ET Jan. 29. The search found sentiment to be 51.2 percent negative, not surprising considering the generated word cloud found words like ‘manipulation’ and ‘shorting’ to be of prominent use. This word cloud does not account for slang and sarcasm, which is important to note.
Another thing to note? Check out the age talking about these keywords. As a likely result of much of the conversation being driven by Reddit, the 25-34 age demographic is fueling the conversation, far more than any other age group, as shown below. Nearly half of the conversation is derived from this group, mostly in the Millennial generation.
As far as the other search, it was conducted with the keywords “Robinhood” and “GameStop.” Again, these were chosen in an attempt to weed out noise not related to the topic at hand. Sometimes, a simple search is all you need. This search found 371,000 posts with a much higher negativity sentiment of 60 percent. Of course, this reflects the blowback of Robinhood’s decision yesterday to temporarily suspend trading of GameStop stock. It’s reflected in the below word cloud.
Again, it’s the 25-34 age demographic that is talking most about these keywords at a similar clip to the first search. An initial reaction is that Robinhood will have to do a lot to win back this group that appears to be quite disgruntled.
On Friday, the Security and Exchanges Commission did get involved, as it released a statement Friday morning and vowed to “ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing,” according to Market Watch. The SEC said it is closely monitoring and investigating the situation.
We’ll continue to monitor any new updates from our perch on the fourth floor of the College of Communications and Information at The University of Tennessee. Check back for more dives into topics of social media chatter.