The David and Goliath battle between amateur traders and hedge funds played out over the WallStreetBets subreddit signals a redefinition of the rules of engagement for financial communication professionals.
To outsiders the WallStreetBets saga has shown that a giant investment firm can now be undermined by a loose coalition of online amateur retail investors – becoming the dominant market force when deciding the price of a listed company – in this case GameStop, a US video game retailer.
While obviously having huge ramifications for the investment community and government regulators, it’s also forced listed companies to re-examine exactly who, how and where they focus their future communications strategies.
Publicly listed companies have well resouced and dedicated investment relations and communications professionals to ensure their investors and stakeholders are informed about company and market developments that may impact investment decisions.
Traditionally investor relations and communications strategies have sought direct contact with institutional investors, which due to their large purchasing power have had significant influence on stock movements.
Analysts and financial media, whose commentary can influence broader investment trends have also been key targets.
Individual retail investors, disparate in nature, have had relatively little impact on share prices, and so received a proportionate amount of attention from companies’ investor relations and communications professionals.
Companies are now being forced to re-examine their priorities in the wake of movements that have seen digital platforms such as Reddit and Robinhood harnessed to collectivise and empower individual traders.
Conventional communications techniques, such as investor briefings, market statements, press releases and AGMs, are unlikely to cut through to these unpredictable and disparate, yet potenitally influential audiences.
While WallStreetBets has collectivised traders, it has no formal structure and centralised contact points, and contains a broad range of sentiments; making the group’s dynamics malleable and fast changing.
WallStreetBets has its own lingo with terms such as ‘stonks,’ ‘’diamond hands’ and ‘tendies.’
While the unique contrarian culture, celebrates cult redditor traders, with pseudonyms such as DeepF*****gValue.
It’s a long way from your traditional AGM or investor briefing.
As the infleunce of similar digital investment collectives grows across other financial markets and digital platforms, increasing numbers of listed companies may be find they need to rethink the tone, form and delivery of future communications strategies.