REUTERS/Dado Ruvic/Illustration/File Photo
- A Brunswick Group survey found 58% of institutional investors have used Reddit for investment decisions.
- And 46% of investors said they expect to increase their use of Reddit.
- "Institutional investors look for ways to keep their pulse on the conversation among retail investors."
Nearly 60% of institutional investors said they have used information on Reddit for an investment decision, according to the results of a new Brunswick Group survey.
The investment advisory firm surveyed 257 US and European institutional investors – professionals who trade for banks, hedge funds and pensions – and found that 58% have used Reddit.
In addition, 46% of investors said they expected to increase their use of Reddit for investment decisions in the following year.
"Reddit continues to grow as a platform for investment advice with more than 33 million finance conversation threads on the site, which has caught the attention of institutional investors," Brunswick said.
The report also said 81% of investors made an investment decision based on information from a digital or social media site. Though Reddit was held in high importance, it fell behind other social media sites like Twitter, Instagram, YouTube, and LinkedIn when investors were asked to rank a platform's importance in evaluating stocks.
Reddit became popular in the retail investing community a few years ago, with amateur traders flooding the subreddit WallStreetBets to jump on the wild ride meme stocks took during the pandemic.
Now various subreddits have extended their reach to professionals, with 49% of institutional investors saying they got an investment idea from WallStreetBets, 51% from the subreddit r/cryptocurrency, and 53% from r/investing.
The interest among institutional investors may be linked to the plunge in meme stocks that were once touted on Reddit, the report said, pointing to the rise and fall of Gamestop, AMC, and Bed Bath & Beyond that were popular during the 2021 short squeeze.
"Institutional investors look for ways to keep their pulse on the conversation among retail investors. What's more, institutional investors are likely to be retail investors in their personal lives and may find their retail research habits helpful in their professional roles," the report said.