February 5, 2021 at 5:00 am ET
Last month, Reddit’s now-famous army of day traders created historic market turmoil by organizing millions of retail investors to bring huge hedge funds to the brink of bankruptcy. Within a matter of hours, companies and financial institutions alike scrambled to raise billions of dollars to make up for losses, while a shocked public and Washington looked on.
Reddit’s WallStreetBets forum has 8 million members and shares in its target investment, GameStop, hit an all-time high of $483 last week. What the retail army did to GameStop is breathtaking, driving the struggling mall-based video game seller stock up more than 1,600 percent in a month.
During this frenzy, retail brokers, clearinghouses and other institutions witnessed the power of organized retail or “meme” investing. This activity has earned the ire and scrutiny of federal and state regulators, with at least two congressional hearings scheduled and a host of government agencies demanding answers from companies and brokers alike. It will take years of investigations and countless lawsuits to figure it all out.
While the political and financial ramifications of the GameStop meme investment rally are far from over, companies should seriously consider how a small but dedicated community like r/WallStreetBets, a subreddit of amateur investors that has existed since 2012, can ensnare their enterprise and cause a full-scale financial and reputational crisis.
Following the GameStop’s stock rally, forward-looking Fortune 500 companies have smartly started to seriously consider the impact of meme investing on their value. Could an army of disparate, online short-selling investors drive their stock price, reputation, growth and the regulatory climate?
The answer is unequivocally yes, and companies must be ready to anticipate threats and protect themselves online. The following strategies can help either prevent or at least get an early warning and circumvent the damaging fallout of ‘meme’ campaigns should they become a target.
Up your listening game. If you’re hearing about a conversation for the first time on CNBC while your stock prices are going through the roof or day traders are targeting your fund’s short positions, then your digital media listening strategy is failing you. Social media listening tools tend to focus on Twitter due to the ease of integration with its API, but that doesn’t mean conversations about your brand aren’t happening elsewhere. Ensure you’re thinking about your organization’s digital reputation holistically. Write queries that reflect the way users are actually talking about your brand, not the way you’d like them to be talking about your brand. Cast a wide digital net and make sure you look for spikes. Your digital media data should look like a heartbeat: regular and predictable. When it spikes or becomes unpredictable, be ready to act.
All platforms have value. There are no fringe digital platforms anymore. With advances in search, you should expect your digital monitoring to search every platform. It is easy to write off smaller startup platforms as too small or too niche for serious business. That is the wrong way to think about it. Your digital monitoring must go beyond the big platforms and explore emerging digital communities.
While platforms like Twitter, Facebook and Snap maintain far more active daily users than Reddit does, the latter is growing at a significantly faster rate: As of October, its daily user base was up 44 percent year over year.
Be first to listen but be slow to engage. Being an active listener on the hot new platform is smart, but don’t dive headfirst into Reddit if it doesn’t make sense for you or your brand. Horror stories abound of unprepared celebrities and executives facing down a mob of trolls (or rightfully angry customers) during ill-advised AMAs. As with any other platform, knowing your audience — and using that knowledge to develop a robust, differentiated channel strategy — is key.
Pay attention to the nontraditional voices. Depending on the platform, industry or area of interest, digital influencers can look vastly different from one another. Keith Gill, the Redditor who was recently credited by The Wall Street Journal, The New York Times and others with orchestrating the GameStop short squeeze, goes by DeepF***ingValue on r/WallStreetBets and Roaring Kitty on YouTube. Don’t discount the influence of a user because they’re missing a blue check mark or because their primary sphere of influence exists on a platform other than Twitter. Spend time researching both your possible advocates and your possible attackers.
Know your online formula. Conversations and posts that are born on one digital platform don’t always die there. Consider the many Instagram meme accounts that recirculate content that originally came from Reddit, Twitter or TikTok, or scroll through Instagram Reels and count the number of reposted TikToks that populate your feed. Where do conversations about your brand originate? Are users talking about your brand differently on Twitter than they are on Reddit? Keep in mind that, while it’s essential to have a strong understanding of how your brand is perceived online, you shouldn’t assume this formula is consistent.
As platforms and user behavior evolve over time, continue to monitor and analyze how those changes are impacting the conversation about your brand. Online forums, many of which have struggled to remain financially viable amid the rise of tech giants, may see a resurgence as Reddit continues to grow its user base. Regulations, algorithmic changes and updates to platforms’ moderation policies can impact the conversation as much as, or sometimes even more than, positive or negative news about your brand. An effective digital strategy can be the canary in the coal mine for protecting your company’s brand and ensuring that its value and reputation remain untarnished.
Hastie Afkhami is the head of digital at S-3 Group, where she develops and implements global digital campaigns and cross-discipline digital initiatives.
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.