The explosion of small investors moving unpopular stocks like Gamestop has bigger companies looking for ways to connect with them via social media.
When, in January, a random collection of small investors banded together via Reddit to push up the price of unpopular stocks such as Gamestop and AMC Entertainment, Wall Street awoke to their collective influence. AMC’s CFO Christina seized the opportunity to sell new shares in the movie theater chain and reduce its debt.
She’s not alone. The explosion of small investors moving unpopular stocks like Gamestop has bigger companies looking for ways to connect with them via social media.
Blame it on the Covid. During the pandemic, small investors obliged to work from home have dabbled in commission-free trading platforms. They educate themselves on investing sites like Seeking Alpha, Investing.com and Nerdwallet. They practice short strategies and companies have noticed. Auto parts seller CarParts.com, for example, saw its price rise more than 50% in January on interest from independent investors. CarParts.com’s leaders decided to host an event this spring dedicated to these new supporters, who wil be able to ask questions of CarParts.com CFO David Meniane.
The new-style shareholders differ from institutional investors in that they often tune out quarterly financial reports, ignore press releases, and are oblivious to experienced analysts. CFOs looking to turn them into long-term investors want to educate this new niche and bring them news wherever they roam on social media. That’s why VIQ Solutions, a Canadian company that uses voice and video capture to manage digital content, is putting its CEO on YouTube to talk about strategic acquisitions.
Health Space, another Canadian firm in health information services, is now working with Irpub, a network of 6 million active investors. The objective: connect with retail investors, educate them, and tell them about investment opportunities through newsletters.
Twitter is another channel companies are exploring as they reach for the retail crowd. Giant chipmaker Qualcomm is sharing its financial results with its 438,000-plus followers on Twitter. Big banks too, are active; Goldman Sachs claims more than 843,000 followers. So many little guys to connect with.