Screenshot: How Reddit shone a light on the madness of markets
This week
**Media Moment of the Week: Das ist Numberwang!
**How Redditors beat the market at its own game
**Do influencers need a rebrand?
Media Moment of the Week: Das ist Numberwang!
This week’s media moment is one that journalists the world over would probably rather forget but, being the intrepid media reporter that I am, I’m not going to let it slide.
On Monday German business paper Handelsblatt breathlessly reported that the Oxford/Astrazeneca Covid vaccine was just eight per cent effective in over 65s, sparking general panic and hair pulling. Hours later, however, it emerged that the paper appeared to have muddled up its numbers — eight per cent was actually the proportion of over 65s taking part in the trials.
Given the genuine dangers of vaccine misinformation, it’s fortunate that the story was quickly discredited and had a limited impact. Let’s just hope it’s the last time we engage in a mid-pandemic game of Numberwang.
How Reddit shone a light on market madness
Have you heard the one about the Redditers who took on Wall Street? No, it’s not the latest Comedy Central car crash, it’s a real story, and an irresistible one at that. In a matter of days, a few disgruntled traders on a relatively unknown corner of the internet created huge losses for institutional investors and wreaked havoc across global stock markets. If you’re not up to date on the full story, my colleague Angharad Carrick has written an excellent explainer.
There is, as they say on Reddit, a lot to unpack here. The first may seem obvious but is, I think, relevant: social media is quite the force to be reckoned with. We’ve seen the lines between social media and politics blur into oblivion in recent years, and the consequences have been almost entirely negative. Yet discourse on the tech platforms has always remained at arm’s length from finance — helping to maintain the illusion that stocks, shares and short-selling belong to an esoteric world beyond the grasp of the average human (about which more later). This week, social media turned its attention to something unfamiliar, and the impact was profound.
There are some positives to draw from the online attention. After all, improving awareness and understanding should always be considered a good thing. The Big Short and Margot Robbie (this iconic scene, for the uninitiated) were both trending on Twitter yesterday as people tried to grapple with the ins and outs of short-selling, while a string of spoof explainers also cropped up. I even had friends messaging asking me to explain “this whole Reddit thing”, and trust me, they never take an interest in my work.
On the less rosy side, the ease with which a group of bored amateur traders on a messaging platform were able to send Wall Street into a tailspin will no doubt raise further questions about tech regulation. But that’s not the major issue here.
There’s a condescension among old-school investors who have turned their nose up at the Redditors and their meme stocks, gifs and expletive-laden battle cries. This behaviour, they opine into their whiskies, is unbecoming. Yet what happened this week is no different to what’s been happening on the stock market for years. Yes, the format is different, and tech has helped to magnify it, but running up stocks on little more than speculation is hardly new. What’s really rattled the short-sellers (beyond estimated losses of $5bn, of course) is that they’ve been beaten at their own game.
That’s not to say the Redditors are without fault — it’s hard to argue that this isn’t market manipulation pure and simple. But there are two underlying messages that the denizens of r/WallStreetBets were trying to make. First, anyone can play at this stock market game. Second, it doesn’t take much to make the whole financial system look rather flimsy.
It’s not clear how much longer this market madness will continue. Online platform Robinhood has restricted trading in some of the most volatile shares and regulators will be eyeing up their next move. Nor do we know if this was a one-off protest, or whether social media will now become a major market mover. What’s clear, however, is that rather than denigrating the Redditors, institutional investors would do well to learn from their losses.
Do influencers need a rebrand?
If Reddit didn’t catch your attention this week, I’ll wager that a stream of pictures of bikini-clad models and flexing bodybuilders living it up in Dubai probably did. Scores of social media stars have come under fire for their recent trips to the land of luxury, where they have obligingly served up their pallid, housebound followers with fitness classes, cooking videos, or whatever it is they’re famous for. Sheridan Mordew, one of the offending influencers, appeared on breakfast TV (live from her hotel swimming pool) to try and justify her essential business trip, but that went down about as well as a Poundland in the lobby of the Burj Khalifa.
Beyond the obvious impertinence of flaunting your extravagant (though not technically illegal) trip to Dubai during a pandemic, the episode highlights a fundamental flaw in the workings of influencer marketing.
This much-derided sub-section of marketing does, it must be said, have its advantages. When done right, influencer marketing can build far greater brand trust and purchase intention than more traditional forms of advertising. When done badly, however, it comes across as shallow and opportunistic, and reflects badly on both the brand and the influencer.
The issue is that, at the moment, the good is getting lumped in with the bad. When we talk about influencers, we could be talking about a knitting micro-blogger or the latest Love Island star. While the former may have built up a modest but loyal following over a number of years, the latter is likely to enjoy massive but ephemeral fame. And while an authentic influencer will be selective about their brand partnerships, a social media celebrity is more likely to accept any endorsement. These fleeting online stars are what influencer marketing guru Scott Guthrie refers to as “banjo” influencers, due to their readiness to “bang another influencer job out”.
There is a place for both categories of influencer, and brands will choose the partner most suitable to their offering. But the risk is that, when a controversy such as Dubaigate emerges, all influencers are tarred with the same brush. With social media use growing and ecommerce on the rise, influencer marketing has a bright future. But if it wants to shake off its bad name, perhaps it’s time for a rebrand.
The algorithm recommends
- Apple has joined the exclusive club of companies to pull in a staggering $100bn of revenue in a single quarter while Facebook, which this week rolled out its UK news service, also beat expectations. Tech’s bullish run shows no signs of slowing down.
- Marty Baron has announced he is stepping down as editor of the Washington Post. The Post won 10 Pulitzer Prizes during his eight-year tenure.
- Twitter has bought Substack rival Revue as it looks to capitalise on a growing trend of writers starting their own newsletters. Maybe I should get involved…
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