Opinion | When Social Media Enters the Stock Market

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From WSJopinion: In this week’s Future View, students debate the lessons of the social media’s role in the GameStop stock-market mania

discusses the role of social media in coordinating the GameStop stock-market mania. For next week we’ll ask, “How has your experience of the internship and job market changed at different stages of the pandemic? What advice would you give to other students?”

to submit opinions of fewer than 250 words before Feb. 16. The best responses will be published that night.The extent to which the Reddit users discussing investments do good is proportional to their participation in the price-discovery mechanism. At its best, social media serves as a forum for retail investors to conduct and share research. Investors, acting on the profit motive, will attempt to discover discrepancies between the price and long-term value of a security.

At its worst, social-media driven investors actively undermine the price- discovery mechanism. GameStop and AMC feature prominently in headlines, but BB Liquidating Inc. best illustrates the patent absurdity of Redditor investing. A remnant of the bankrupt Blockbuster Video, the firm’s lateststates that it has “no ongoing business operations” and “will not have any operations in the future.

 

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