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Social Media as A Market Force….

 

Social Media as A Market Force….

Courtesy of Howard Lindzon

The markets are humbling. Even if you have no direct skin in the game – for me that is the stocks of Gamestop and AMC at the moment – you can get you ass kicked in the fallout if the trades in the system are big enough. This week that is Robinhood (of course there could be many more companies already in the line of fire).

When I discovered YouTube, I knew I could use it to help me understand brand trends. I started my show Wallstrip and made over 400 episodes to discuss leading stocks and their catalysts.

As soon as I started to really use Twitter in 2007 I knew it would change markets. I whiffed/passed on a chance to invest 25k in the seed round, but made investments in many companies in the ecosystem like Tweetdeck which eventually got me early Twitter shares.

Twitter is why I started Stocktwits.

The social media explosion is why I invested in Etoro in 2010 and Robinhood in 2013 and Alpaca (powering the next thousand brokerages around the world) and many other investing startups.

I knew fractional ownership was a game changer and really lead to the unbundling of indexes.

What I did not totally comprehend:

1. That options would be so beloved by this next generation of traders and investors

2. The internet mob unleashed on public microcaps … this is fascinating and game changing and scary and here to stay …

3. The scale and mechanics and plumbing

Look at this chart of Gamestop for January. I joked that when I was a kid the only game we had was ‘Pong’ and ‘Pinball’

I have been making calls and reading as much as I could on the mechanics of the trades and the systems. I don’t still fully [get] it all.

I am not sure how Wall Street and Main Street will reckon with the rise of social media as a market force. I am getting calls from very large Hedge funds (that has NEVER happened) telling me how in love with Stocktwits they are and how their traders are keeping an eye on the streams. They are already poring through Reddit and Twitter for the next GameStop.

In this new world, short-sellers may now be at risk of ruin by masses of small traders who have found a new strategy.

Citron’s Andrew Left threw in threw in the towel on his short selling YouTube videos.

My smart friend (I promise to get him on my podcast) Dan McMurtrie had this to say about short selling – The golden age of short selling is coming.

I did a Bloomberg appearance on my friend Joe’s show to discuss the high level changes I have been seeing . Click here to watch.

For a deep dive on the plumbing and how this leveraged run took place , I liked this thread from a smart person on Twitter.

There are going to be many lessons and hopefully a better set of rules and regulations to come out of this moment in the markets.

The players are here to stay and so is the game and so are the markets. Pace yourself.

Disclosure – Along the incredible rise, our firm Social Leverage has sold a portion of our Robinhood shares, but we still do own a majority of our shares.

 


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