Social contagion and asset prices: Reddit's self-organised bull runs

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Can unstructured text data from social media help explain the drivers of large asset price fluctuations? This paper investigates how social forces affect asset prices, by using machine learning tools to extract beliefs and positions of `hype' traders active on Reddit's WallStreetBets (WSB) forum.

• Our stylized model shows that peer effects help explain return predictability and reversals, as well as bubble dynamics.
• We empirically document that sentiments expressed by WSB users about assets' future performances (bullish or bearish) are in part due to sentiments of their peers and past asset returns.
• The paper directly estimates the effect of WSB activity on asset prices.