One in five institutional investors under 30 have used Reddit to make an investment decision.
Never heard of Reddit? It’s time to start paying attention.
Last month Brunswick released the latest edition of its annual Digital Investor Survey. The survey looks at digital media use by buy side investors and sell side analysts around the world. In 2018, investor use of digital media to make investment decisions hit the highest levels recorded, with 88% of all investors reporting making investment decisions or recommendations based on something they learned from digital media—up from 70% in 2017 and 41% in 2015. Once thought to be the realm of the marketing department or the most junior employee, the survey results indicate that companies must rethink their approach to digital and social media, ensuring that corporate- and investor-focused content has its place among the reaction GIFs and passive-aggressive clapbacks.
Another noticeable trend in this year’s data was investors’ increasing use of Reddit in their decision calculus.
Now before we dive in, a quick primer on Reddit itself. For many people, Reddit is probably the most popular website you’ve never visited.
Reddit is ranked as the #3 most visited website in the U.S. with 330MM+ monthly active users around the world, and more than 138K communities called subreddits that operate like early internet forums. Each subreddit has a macro-level theme (whether its vexillology, rugby, or tall people), and users can share content that is then discussed by the subreddit’s subscribers. Users comment on individual posts and receive upvotes or downvotes based on how members of the subreddit feel about it. Essentially, it’s an internet democracy where the “best” content wins (most of the time).
As younger generations migrate away from perceived “old school” social networks (and we say perceived because Reddit is just a few years younger than Facebook), Reddit has experienced a surge in popularity. So, it’s no surprise that investors—specifically younger investors—are using the site as another source for information when evaluating investments.
Brunswick Insight’s Digital Investor Survey found that one in four institutional investors under the age of 30 browsed Reddit to investigate an issue about a company, and one in five used the information they found on Reddit to make an investment decision. The latter represents a 16 point increase since 2017.
An analysis using a tool developed by Andrei Kashcha sheds some light on which communities on Reddit younger investors are likely browsing. Kashcha’s tool shows connections between subreddits based on where active users comment. If we run with the assumption that investors are subscribed to r/investing (all subreddits begin with “r/”), there are three top-level categories of subreddits that investors frequent the most: market intelligence, news, and personal subreddits. The market intelligence category consists of subreddits like r/RobinHood (the popular stock trading app), r/options, and r/stocks while things in the news category are subreddits like r/business and r/finance. Each of these communities sees hundreds of submissions per day about business news, with several of them leading to substantive discussions. Take for example the recently announced merger between BB&T and SunTrust, the largest bank merger in the U.S. since the financial crisis. Within 12 hours of the press release crossing the wire, there were upwards of 100 unique threads discussing different topics, including:
• The merits of the combination,
• House Financial Services Committee Chairwoman Maxine Waters’s call for scrutiny of the deal, and
• How each bank’s culture could help or hinder the integration process.
The sell-side will no doubt have a perspective on the merger based on their financial models, but these threads present a gold mine for those looking to add “customer” or “every man” color to their analysis (our data indicated that sell-side investors were more likely to use Reddit than the buy-side).
What does all of this mean for corporate communications and investor relations professionals? We have two key takeaways.
1) In Reddit parlance, become a “lurker.” Unlike Twitter or Facebook which have opened up their API to third-party social listening tools, Reddit has been stingy with its data. As a result, the best way to get a feel for what’s happening on the platform is to dive in yourself. Do what the next generation of investors are doing. Create an account. Find a few personal and professional subreddits and get a feel for how the platform works. We, along with 73% of all Reddit users, use Reddit as one of our primary news sources, so add it to your morning news routine.
2) Think through what an engagement strategy might look like. This is important, really think through what makes the most sense for your company. Reddit can be a dangerous place for companies to engage. Look no further than REI CEO Jerry Strizke’s disastrous Ask Me Anything attempt. That being said, Reddit can also be used a powerful way to tell a company’s story investment story at scale, like former Intel CEO Brian Krzanich did in his Ask Me Anything. Reddit also recently beefed up its paid advertising capabilities and gives companies the option to target by subreddit, which is much more tailored form of advertising than those offered by other social networks and is a gamechanger in the quest to reach niche audiences (like investors) online.
The Brunswick Insight and Digital teams are always around to talk you through the findings of this year’s Digital Investor Survey (feel free to AMA), and we encourage you to check out the webinar we’ll be hosting tomorrow, February 14. You can register for that here.
Braeden Mayer is an Associate based in Washington, DC. A founding member of Brunswick’s digital practice, he has led the industry in integrating digital communications into M&A announcements and shareholder activism campaigns.
Noah Kristula-Green is an Associate in Brunswick Insight based in Washington, DC. He directed the development, fieldwork and analysis of the survey.