As trading platforms like Robinhood create a rise in retail investor market participation and spark a renewed interest in shares of companies dubbed “meme stocks” like GameStop (GME), BlackBerry (BB), and AMC (AMC), the world of finance is seeing an intersection with the social media sphere.
“What you're seeing is a much larger trend here,” Alexis Ohanian, founder of venture capital firm Seven Seven Six and co-founder of Reddit, told Yahoo Finance Live. “It is the intersection of community and capital. It's the intersection of social media and finance.”
With online communities such as Reddit’s r/WallStreetBets fueling the meme stock craze, the movement has dismissed concerns of market manipulation. Jaime Rogozinski, who founded the subreddit in 2012, says he did it looking for a more active way to trade investment ideas within a community. The forum now boasts a community of over 10.6 million subscribers.
According to Ohanian, it is this sense of community and ease of communication, in tandem with a more accessible user experience for consumers, that has enabled this new era of trading to arise.
UKRAINE – 2021/02/08: In this photo illustration a WallStreetBets (WSB) logo of a subreddit where participants discuss stock and option trading is seen on a mobile phone screen in front of a Reddit logo. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
“At the end of the day now, the user experience—and that's the story of all this—the user experience keeps getting better and better and better for consumers,” Ohanian said. “And so naturally, consumers are going to gravitate towards things that are delightful, and then they also have things at their disposal they never did before, which is real time communication with their friends.”
Ohanian, who is leading a $4 million seed-funding round for the new sports-betting startup Wagr, believes that the meme stock movement has demonstrated an investment opportunity in platforms that combine a sense of community around activities like betting or investing. Wagr is an app that aims to wed social media with the gambling market.
In addition, Ohanian believes that the rise of the retail investor and meme stock forums has forged a new path for the future of finance.
“I'm making big investments in this space, companies like Wagr, because I believe we're going to see in the next 10 years a whole other architecture for finance that's built around community engagement,” Ohanian said.
Whether it’s placing wagers on a sporting event or trading stocks, Ohanian says he will continue to invest in platforms that incorporate elements of community engagement. And he does not believe the meme stock movement on Wall Street will be going away anytime soon.
“More and more people are going to be coming online,” Ohanian said. “More and more people are going to be engaging in everything from investing to wagering, and I'm excited to see more and more platforms that are building it intentionally.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV
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