The smart money's watching Reddit with a skeptical eye

Survey of institutional investors reveals increased use even amid declining trust

The smart money's watching Reddit with a skeptical eye

Whether it’s to get investment insights, or to get insights on Robinhood traders who follow those insights, more institutional investors are using Reddit as part of their intelligence-gathering.

That was one of the key findings in a recent survey of institutional investors – including 537 buy-side investment professionals and sell-side analysts globally – conducted by the Brunswick Group.

As reported by Institutional Investor, 27% of the respondents polled in February said they explored the online forum to investigate issues related to investment, 5% more than the number from just three months prior.

Around 20%, meanwhile, said they’d made a trade, changed a recommendation, or altered a position because of activity that stemmed from the infamous WallStreetBets subreddit, and use of that forum was up by six percentage points over November.

But respondents mostly rated Reddit as a questionable source of information, with more than half of (54%) scoring the social media platform just 1 or zero out of 10 in trustworthiness. Overall, the site got an average score of 2 out of 10 on trustworthiness, compared to 3.3 in November.

Trust in Reddit was modestly higher among younger respondents, as 31% of those under 30 years old confirming that they trusted it as an alternative to traditional media. In contrast, just 14% of the total pool said the same.

Asking respondents more broadly about their most used and trusted information sources, the survey found investor relations websites topped the rankings in trustworthiness, where the category scored 8.4 on a 10-point scale, as well as usage.

Mainstream financial news outlets such as Bloomberg, the Wall Street Journal, and the Financial Times were similarly well trusted, garnering scores from 8 to 8.2. At the other end of the continuum were social media sites such as Facebook and Instagram, which scored 2.6 and 2.7, respectively.

The most reliable social network, LinkedIn, got a score of 5.7, outdoing some broadcast news channels such as CNN (5.4), MSNBC (5.2), and Fox News (4).


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