It’s hard to argue that social media doesn’t shape current events, and this influence often leaks into financial markets. Social media influencers can often reach millions of people, which has an undeniable effect when they start discussing markets and making stock picks.
TikTok has become an unexpected leader in social media investing thanks to its short video content structure, which enables easy virality. But can TikTok trends actually create long-term wealth? Are these influencers actually qualified to give solid investment advice? Or is this just the newest vehicle for pump-and-dumps?
Keep reading to learn more about how social media influences investment trends and whether TikTok stock tips are worth following. We’ll highlight some notable successes and failures over the last few years and provide insights on navigating this breakneck investment landscape.
How TikTok Became a Stock Market Influencer
Social media started influencing investment decisions with the advent of the internet message board. Whether it's Facebook, Reddit, or Discord, communities focused on investing have cropped up, allowing users to share theories, strategies, and experiences (both good and bad).
But TikTok has taken social media investing to another level thanks to the following combo:
- Short, viral stock tip videos that capture fleeting attention spans
- Trends and hot stocks promoted by influencers that sometimes go parabolic
- Younger, risk-tolerant audiences eager to take chances for windfalls
Some TikTok investing influencers promote education and suitable strategies for long-term wealth growth. However, many more are in it for the quick gains, views, and vibes. Going viral is part of the strategy, so questions abound about the reliability of TikTok stock pickers.
Viral Stock Picks: Hits and Misses
If you lived through the meme stock mania of early 2021, you’ll likely recognize some of the names listed here. Many of these stocks created massive gains—if you timed them right—but also led to painful losses for those who got in too late. Social media has become a powerful force in the market, for better or worse. Here’s a look at some of the biggest viral hits and disappointments.
TikTok Success Stories
Some stocks didn’t just go viral—they became legends. While their long-term viability remains debatable, these names delivered wild gains and proved the influence of retail traders online.
- GameStop Corp. NYSE: GME: Patient Zero in the meme stock craze, GME soared to outlandish heights in January 2021. On a split-adjusted basis, the price rose from $10 to $80 in less than three weeks on the back of a massive short squeeze. Today, the stock has lost over 70% of its peak value.
- Tesla Inc. NASDAQ: TSLA: Tesla is a large-cap stock that frequently moves like a meme stock thanks to social media influence and the antics of its erratic CEO Elon Musk. For example, the stock is down over 40% in the last three months but still up 40% over the previous 12 months—shrug emoji.
- AMC Entertainment Holdings Inc. NYSE: AMC: AMC rode GameStop’s coattails with a short squeeze of its own in 2021. AMC had three large spikes in 2021, creating a cult online following that pushed shares as high as $300 on a split-adjusted basis. Today, the stock struggles to stay above $4. The cult following remains, but it's just kind of sad at this point.
TikTok Stock Fails
For every viral success, there were plenty of hyped-up names that never delivered. These stocks (and trends) promised easy money but ended up as cautionary tales.
- Vinco Ventures OTCMKTS: BBIG: Hyped online as a candidate to follow GameStop or AMC, but the momentum never materialized. The company was delisted from the NASDAQ due to multiple compliance issues, including failure to maintain the required number of independent directors and delays in filing financial reports. As a result, BBIG now trades over-the-counter (OTC) for less than a penny.
- Camber Energy is a penny stock in the energy sector that surged briefly due to TikTok's virality but quickly crashed and is no longer tradeable today.
- Memecoins, SPACS, and NFTs: Many obscure stocks or cryptocurrency projects have been pumped on TikTok, only to collapse soon after (or worse, be victimized by a rug pull).
The Risks of Following TikTok Stock Advice
Watching investment videos on TikTok can be exciting because you discover interesting stocks and meet communities of like-minded people. But you must also be cautious and look out for the following red flags:
- Pump-and-Dump Schemes: TikTok is a breeding ground for these scams, where influencers promote stocks they own and then sell as their followers flood the market with liquidity, often with penny stocks.
- Lack of Due Diligence: Social media investors are often amateurs who don't analyze fundamentals or market trends.
- Short-Term Volatility: If you don’t have a strong stomach for risk, TikTok investing will likely be too volatile for your liking.
- Misinformation: It's easy to portray yourself as something you’re not on social media. TikTok influencers with fancy cars or expensive jewelry likely didn’t acquire them through careful risk analysis—if they even own them at all. Always fact-check influencer statements with healthy skepticism.
How to Separate Hype from Opportunity
It’s easy to get lost in the hype of viral videos and short-term stock success. Here are four tips to avoid falling into traps:
1. Do Your Own Research
Yes, these are famous last words for social media users, but it's crucial to understand stock analysis so you can compare influencer claims with cold, hard data. Check financial data, listen to earnings calls, and track analyst recommendations.
2. Beware of Unrealistic Promises
If it sounds too good to be true, it almost always is. True investing windfalls aren’t earned by finding "the next NVIDIA." They come from finding unique and innovative solutions to real problems. There are no guarantees in investing, so be immediately skeptical of anyone promising easy and outsized returns.
If you rely on strangers on the internet for investment advice, you should be able to verify their credentials. That’s why you should follow financial news sources with legitimate analysts and reporters like MarketBeat, CNBC, and Bloomberg. Compare what influencers are telling you with what experienced market pros are saying.
4. Manage Your Risk
The urge to go "all-in" or YOLO your capital is strong with social media. Risking it all for one giant windfall might land you in the Best of Reddit thread, but usually not for the reasons you want. Never invest money you can't afford to lose on volatile TikTok stock picks, and use stop-loss orders to protect from steep selloffs.
Expert Opinions: Is TikTok a Reliable Investment Tool?
TikTok’s influence on the investment community has been a double-edged sword. On the one hand, social media has created a level of market awareness in young investors who otherwise may have waited years or decades to begin building nest eggs. Reaching younger people is important for their long-term prospects and the health of the market. Learning to invest young will lead to happier golden years.
On the other hand, TikTok influencer stock analysis often lacks rigor, and social media stars rarely come from finance backgrounds or have formal education in asset management.
When betting on TikTok stocks, you’re counting on the promoter’s influence to lead to a buying frenzy. The company’s product or industry and its fundamentals don’t matter. You’re simply looking to buy low and then find an eager party to sell to before the music stops.
TikTok Stock Picks: Proceed With Caution
Making investment decisions based on TikTok influencer advice is a rollercoaster that not everyone will be comfortable riding. TikTok is often chock full of hype but low on detailed analysis—and this is by design. Videos are intended to be brief and easily shared.
So, while you’ll forever need to question TikTok influencers' motives, you cannot argue that the app creates interest and demand for stocks, especially among young people. And learning about investing and the stock market when you're young is always a good idea since you have time to learn, make mistakes, and let compound interest work to your advantage.
But social media is frequently just a highlight reel that hides the downsides of life, and that’s especially true with TikTok investing trends. Many TikTok stock pickers are eager to promote their winning picks and massive gains, but not the ones that failed to materialize or lost substantial money for followers.
Like any other investment tool, TikTok trends should be used as just another arrow in your quiver, not a complete, actionable analysis. Always do your research and consult a professional advisor if you’re unsure how to proceed.
Invest Smarter with MarketBeat
Before investing in a TikTok stock pick, get real-time stock analysis and expert insights with MarketBeat. Start your free trial today: MarketBeat Subscription.
Before you consider GameStop, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and GameStop wasn't on the list.
While GameStop currently has a Sell rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
If a company's CEO, COO, and CFO were all selling shares of their stock, would you want to know? MarketBeat just compiled its list of the twelve stocks that corporate insiders are abandoning. Complete the form below to see which companies made the list.
Get This Free Report
Like this article? Share it with a colleague.
Link copied to clipboard.
