Finfluencers

Abstract

The social media activity of financial influencers (“finfluencers”) can propagate and amplify poor investment advice, especially if less skilled finfluencers are more active and their tweets attract more followers. Using tweet-level data from a popular stock-picking platform, we show most finfluencers are unskilled or “antiskilled,” producing negative abnormal returns, while a minority demonstrate skill. Unskilled and antiskilled finfluencers are more engaging, post excessively optimistic tweets that precede price reversals, and attract larger followings than skilled finfluencers. Consistent with a model where social media prioritizes engagement over skill, this leads to the spread of false advice and distorted belief aggregation.

Keywords: Finfluencers, social media, mixture modeling, belief bias, wisdom of the crowd

JEL Classification: G12, G14, G41