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Social Media’s impact on investing: What it means for the industry

Established companies are finding innovative ways to reach out to new consumers on social media.

Social media operators face a conundrum dealing with content labeled satire, which may also be harmful misinformation. — © AFP
Social media operators face a conundrum dealing with content labeled satire, which may also be harmful misinformation. — © AFP

Last summer, Fidelity Investments posted their first ever TikTok, comparing a mutual fund to a burrito. As the groups beloved by marketing executives – Millennials and Gen Zs – become more and more active in the market, more firms are turning to familiar ground, social media, to learn and engage as investors.

It has been estimated that 75 percent of investors are active on social media and 91 percent of Gen Z investors use social media for information on investing.

It also appears that Fidelity’s approach is paying off, with over 13,000 followers on TikTok and videos that have received millions of views.

The nearly 80-year-old brokerage firm is just one example of the industry’s swift and prominent shift to social media to engage and actively educate the next generation of investors.

Other examples are:

Commenting in this new means of cross-marketing for Digital Journal is Ryan Barretto, President, Sprout Social.

Barretto has been weighing up why this shift is important to the industry and future investors. Here he explains: “We saw the power of social media with the rise of meme stocks in January 2021, but it goes much deeper than that.”

For instance, Barretto explains: “Dating back just ten years ago, investment information and literacy was gated to the world’s largest institutional investors and money managers. Social media has radically changed that, driven by young, retail investors who are turning to platforms like Reddit, TikTok and Twitter to create and benefit from a financially literate, engaged community.”

As to the current trend, Barretto states: “Brokerage firms like Fidelity are also tapping into the energy of young investors and meeting them where they are with resources and educational material.”

This is likely to be a prominent trend for the time being, as Barretto predicts: “We can expect to see social media only continue to make an impact on markets and the future of investing.”

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Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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