been seeing that growth with capital wealth increasing.” She adds that in 2022, when the markets finished the year in negative terri- tory, institutional investors were net sellers, while retail investors looked for buying opportunities on stocks they missed the boat on earlier in the year. Ben Laidler, Global Market Strategist for social trading and
multi-asset investment company eToro, also agrees. “If 2020 really was the ‘rise of the retail investor,’ then 2022 could arguably be described as their initiation test, with almost every major financial asset on the planet performing dismally in the face of sky-high inflation, rising interest rates and a weakening global economy. Yet after four quarters of bear territory representing the worst year for markets since the 2008 financial crisis, remarkably, most retail investors are still feeling optimistic. Tis is particularly the case with younger investors, who, despite the popular fear-of-missing-out short-term narrative, are more likely than their older counterparts to see 2022 as an opportunity to learn and to buy the dip, with long-term gains in mind.” Ultimately, the rising number of brokerage accounts is distinct evidence of retail investor growth. According to a 2021 Deloitte report, “Te rise of the newly empowered retail investor,” in Janu- ary 2021 alone, approximately six million Americans downloaded a trading app, and retail brokerages reported record-high average daily volumes for equity and options trades. Te report notes that in early 2021, retail investors in the United
States generated about as much equity trading volume as mutual funds and hedge funds combined. With such a surge in retail in- vesting, Deloitte concludes, “It may be tempting to dismiss these new customers as gullible or clueless. However, ignoring them may be short-sighted for several reasons, not the least of which is that they could be an attractive customer segment down the road.” Austin Hankwitz, Co-Founder and Executive Chairman of Witz
Ventures, a driver of venture capital activity for fintech startups and the creator economy, as well as a recent investor in Stakeholder Labs, could not agree more. “With billionaires having popped up left and right throughout the last few years, I believe more and more people are beginning to realize they cannot just be consumers, but must also become owners of the companies they consume,” he says. In a report, “Te State of Retail Investors,” published in February
2023 by
Public.com, 78% of investors have at least one stock in their portfolio that reflects a product or service they use as a consumer, providing opportunities to engage company stakeholders across both IR and marketing functions. Moreover, 83% of investors say they “sometimes” or “frequently” become a customer after becoming a shareholder of a company, so retail investors can become more engaged as a customer after becoming a shareholder of a company.
2 2 SPRING 2 0 2 3 ■ IR UPDAT E
“I don’t want volatility. I don’t want the stock to go down. I’m not shorting the stock. I’m not hedging against another position. I’m buying Starbucks, Tesla, or Microsoft because I believe in the value they are creating.”
What a reasonable retail investor might say, according to Matthew Tractenberg, IRC
Tese statistics lead me to conclude that the retail investor
is influential, not just from an investment standpoint but also in building your company’s brand recognition. Tey are investing in the companies they know and love and that they believe are creating value just as Tractenberg mentioned. If we believe they are influential, in more ways than one, how are they getting infor- mation about publicly traded companies and can we control that information in any strategic fashion?
The Proliferation of Online Investment Platforms We’ve all heard of the website Reddit where communities of people debate anything from the world’s cutest puppy to whether to invest in a stock. Te Reddit r/WallStreetBets community became infamous during the pandemic and meme stock craze. While Reddit may not have initially been created for stock discussions – stock message boards have been around for 20-plus years, Maselli notes – it has certainly changed the way many of us view investment decisions and highlighted the importance of social media in shaping public company messaging. Alexis Ohanian, Founder and General Partner at venture capital
firm Seven Seven Six and Co-Founder of Reddit explains, “Te surge in retail investing over the last several years represents a secular shift at the intersection of community and capital. Whether it’s on platforms on Reddit or others, retail investors have more con- nectedness, more information, and more ability to trade than ever before; this is the new normal.” Social platforms and other online resources are definitely the
new normal, but interestingly the retail investor isn’t necessarily turning to Reddit first for information. The
Public.com survey found that more than 75% of retail investors look for information
niri.org/ irupdate
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