Commentary

Teens Take Over The Stock Market

The financial story of 2021 has been GameStop mania. Since last summer, shares of the moribund brick-and-mortar video game retailer have rocketed from under $5, to as high as $483, before coming down to around $50 as of press time. Fueling this mania are young investors who trade on apps like Robinhood, frequent message boards like Reddit’s “r/wallstreetbets,” and post videos on YouTube and TikTok. The New York Times and Wall Street Journal profile investors as young as 10 making hundreds, if not thousands, of dollars on GameStop stock.

Why are so many teens turning to the stock market? For starters, most trading is now free. Shares no longer have to be purchased in “round lots” of 100, and investors can now purchase one share, or even a fraction of a share. The Robinhood app in particular has democratized trading, gamifying the experience and even making it easy to do complicated options trades on a mobile device. Platforms like Reddit and TikTok enable investment tips to go viral.

And over the last few years, the biggest tech brands have seen their stock prices skyrocket. So if teens are using an iPhone to post a story on Snap, check their Instagram, add something to their Amazon wish list, and binge on a Netflix show, doesn’t it make sense for them to buy a small piece of those companies to share in their success?

Perhaps most importantly, teen gaming has changed teen investing. Until fairly recently, investors and gamers competed against themselves, or a handful of others: a day trader could play Tetris or solitaire while waiting for the market to open, or someone could invite over a few friends, challenge them to Madden Football, and compare stock portfolios.

Now, teens and young adults compete in massively multiplayer online games, ganging up with total strangers to share strategy and resources for everyone’s benefit, and watching and commenting on others’ gameplay on platforms like Twitch. And they’re approaching the stock market in a similar way, banding together, identifying a target (such as GameStop) and coordinating a mass activity (everyone purchasing the stock) that results in everyone on that team winning (with the stock going up, and everyone profiting).

What can brands learn from this new world of massively multiplayer gaming and investing?

*Invest in influencers. GameStop mania started with a few ringleaders, some with unprintable screen names. Within the confines of SEC regulations, brands would do well to recruit influencers not only to sing the praises of the product, but also perhaps tout the stock. If Warren Buffett can do it for Coca-Cola, why can’t Charli D’Amelio?

*Encourage “buycotts.” Many of the stocks that have exploded in the last year are down-on-their-luck retailers and consumer brands such as AMC Entertainment (movie theaters), Koss (earphones) and Hertz (rental cars). Companies in this position can tap into nostalgia and start buycott campaigns, asking fans to help save the brand by buying both the product and the stock.

*Create heroes and villains. The “villains” in many of these situations are the short sellers, who bet on a stock’s decline. Main Street investors associate short sellers with greedy hedge funds, and driving up the stock price is a way of getting back at “Wall Street billionaires.” Many games need a loathsome antagonist, so companies being targeted by short sellers can call them out and rally public sentiment against them, asking consumers to send Wall Street a message by buying the product and the stock.

The brands that adapt to these new rules are the ones that will win the game, on Main Street as well as Wall Street.
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