Shaping collective action in financial markets through the development of popular expertise: An analysis of Due Diligence posts on WallStreetBets

Abstract

Social movements in financial markets have significantly developed in the wake of the 2007-09 financial crisis, resulting in the emergence of various collective actions and demands. We analyze one example of such action undertaken by the r/WallStreetBets (WSB) community (not least through its Due Diligence [DD] section), which disrupted the stock prices of several “meme” stocks (e.g., GameStop) by disseminating influential investment narratives. We study the 150 most upvoted DD posts representing 165,293 words (531 pages) of analysis from WSB. We also interviewed eight members of the WSB community (including six authors of DD posts). We find that a form of popular expertise in the domain of investment narratives emerged, developed, and propagated on this digital platform – to the point of thwarting the ambitions of notorious hedge funds. First, we show that popular expertise took off in the wake of growing resentment among retail investors about the lack of fairness in financial markets. Second, we find that, to appeal to their audience, WSB authors developed and promoted a claim to popular expertise which consists of a hybrid language between traditional financial expertise and an accessible and entertaining writing style, complemented by references to pop culture. Therefore, the rift with traditional financial expertise is not total, as popular experts rely on it to increase the resonance of their investment narratives. Theoretically, our paper improves our understanding of collective actions in financial markets by showing that popular forms of investment expertise sustained by market participants can shape influential collective action initiatives. Overall, our study calls for the mobilization of anthropological theorizing in order to understand the transformation of expertise not only in digitalized markets but also in all spheres of society that see the rise of popular expertise made possible by the Internet and the winds of democratization it conveys.

Keywords: Collective action; Digital platforms; Fairness; Financial markets; Information intermediaries; Investment narratives; Popular expertise; Social movement; WallStreetBets