We study the impact of social media posts and news articles on retail trading on Robinhood by analyzing the net buying activity before and after a (social) media publication. Our findings indicate that both publication types lead to an increase of holders. However, both effects are short-lived, and the effect of social media posts on retail trading is significantly higher. Furthermore, investors buy stocks that are recommended on Reddit regardless of text sentiment. However, they act as contrarians by selling stocks with positive news coverage and vice versa. We thus find evidence for both attention- and information-driven trading behavior.
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Münster et al. (2024) studied this question.
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