During the pandemic, two areas have seen an increase in interest and usage: the crypto space and social media. Use of platforms like Twitter and TikTok has grown anywhere from 8% to 38% in the past few years and the number of people interested in, or already investing in, the crypto market has grown exponentially, with exchanges like Coinbase (COIN) seeing an increase in trading volumes of more than 67%.
I love COIN and am confident that they’ll pivot where the future points them. In a survey done by the world’s leading regulated blockchain infrastructure platform Paxos, well over half of respondents said they were likely to buy or sell crypto in the next few years, and 44% of them had made their first crypto purchase in the last year.
The surging interest in crypto, along with heavy usage of social media, has brought about some forward-thinking partnerships in the space, with companies hoping to capitalize on the interest and draw a younger and broader demographic into investing and trading. This has helped bring about what’s known as social trading, where users can socialize and utilize trust in their networks to make trades on a single platform.
Social Trading Taking Off
Now, a range of established players and startups are betting that social trading will be the future and are rushing to combine the fun and engagement of social media with investing. People on social trading apps can see other user’s profiles, interact with each other, and copy each other’s trades.
One app taking advantage of the trend is eToro. eToro relies heavily on a “copy trading” strategy where users on the app can see who the most successful traders are, sort those names by size of gains or the kind of markets they invest in, then can then automatically copy those trades.
Another company, US based Iris, has put its own twist on the social trading trend and was recently in the news for adding House Speaker Nancy Pelosi to its influencers section. When influencers, celebrities, or friends make a trade, Iris alerts users and allows them to mimic those trades. This plays on the preferences of millennials and Gen Z to share information amongst each other. It’s fun for users and brings wealth management to these younger investors. It’s a business model that is expected to become big business.
New Opportunities
One new kid on the block tapping into the surge of retail trading and social media engagement by combining the two is Trading.TV. Trading.TV is a platform for live-streaming and stock trading, which raised $8 million in Series A funding and is looking to be a “financial superapp.”
Trading.TV recruits financial creators and economy enthusiasts to discuss stocks, crypto, NFTs, baseball cards, defi, and more on livestream. The platform will allow viewers to buy and sell stocks directly from a creator’s video page, including crypto, NFTs, and other products.
The company’s founder says that the platform was founded with the goal of financial education, and they make good on that by running a stock-trading simulator so that users who are nervous about jumping into the market can learn without the fear of losing their money. They did a lot of research up-front as to why people don’t invest in an effort to draw in coveted demographics and found that many would-be investors say they just don’t have the information they feel like they need in order to start trading. Trading.TV aims to change that.
The platform currently boasts a $1 million creator fund and will feature tipping, subscriptions, and advertising for its creators. They’ll utilize “finfluencers” (content creators who help the average investor understand complex financial trading information) to help legitimize and grow the platform. These so-called finfluencers have grown large followings on video platforms recently and Trading.TV aims pull more women and people of color onto the platform and into the space with their help.
Established Platforms Jumping Onboard
Established players are also looking to add live trading as an option, such as Stocktwits, a social-media service for retail investors, beginning with cryptocurrencies. The platform is planning to expand into equities trading as well.
Other brokerages that have added social components to trading, chat feeds, and trending stocks have seen positive engagement, including Webull and Robinhood… and even payment apps such as Venmo have gotten in the game with social feeds and emoji capabilities.
As you know, I am a great fan of Venmo (owned by PayPal (PYPL), which is a screaming bargain right now) and not so much Robinhood (HOOD), which had its shot at transforming Wall Street and blew it.
In the future, crypto exchange FTX is looking to provide the infrastructure for Stocktwits’ crypto trading. Other platforms are following suit, and the move is helping them to grow in popularity, including the US- and UK-based retail investing platform TradingView, which reached a $3 billion valuation. Currently D2C-focused, the platform will soon integrate its services with major brokerage platforms in an effort to drive user acquisition.
TradingView brings together trading services with market analysis and a social network, which allows users to share their analysis, trades, compare strategies, and build community. The combo is proving attractive to retail investors. The platform reports an increase of accounts created to the tune of 400% in the last year and a half, with 30 million monthly users in 180 countries. This rapid growth demonstrates that a lot of newcomers are looking for social media in their trading strategy.
Many of the users finding these platforms inviting are engaging in trading activities through forums like Reddit’s r/WallStreetBets, which has helped with the rise of finfluencers and meme stocks . . . they also share this information with one another on platforms like TikTok.
It’s safe to say that brokers unwilling to engage with this segment of investors through social media components are likely to lose out to companies like eToro, Trading.TV and TradingView.