Wall Street vs r/wallstreetbets: Exploring the Predictive Power of Retail Investors on Equity Prices

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The COVID-19 pandemic has accelerated the rapid growth of retail investors as legitimate market participants. In a David v Goliath showdown, retail investors, organizing via the subreddit "wallstreetbets" helped orchestrated a short squeeze of Gamestop stock, leading to a meteoric rise in the equity's value and a massive loss amongst some notable hedge funds. This research explores whether 'chatter' on that subreddit provides any predictive ability on a stock's price the following day. Specifically, performance on Gamestop and Tesla stock, as they are two of the most heavily discussed stocks on the subreddit. Our top models perform at roughly 52 and 58 percent accuracy, moderately improving upon our 'random' baseline of ~50 percent.