It takes a special topic to get Ted Cruz and Alexandria Ocasio-Cortez aligned on the same issue, but financial services company Robinhood managed that yesterday.
The stock-trading app that democratizes investing by opening up trading to the masses blocked its users from engaging with a tranche of extremely volatile stocks that had been parlayed up by chatter on social channels such as Reddit and TikTok.
Most of the stocks had been shorted by institutional hedge funds and then bid up by retail investors on social media. The embattled brands included names such as GameStop, AMC Entertainment, Bed Bath & Beyond, Blackberry, Nokia, American Airlines, Tootsie Roll, Trivago and Naked Brand Group.
It seemed the professional traders were being hoisted by their own petard and outmaneuvered by new scrappy operators on their laptops in their living rooms or bedrooms who sent GameStop’s shares skyrocketing in recent weeks.
That was until yesterday, when Robinhood and other trading platforms shut the caper down while the hedge funds were seemingly able to continue to trade on those “meme” stocks. GameStop’s shares plummeted.
“Unacceptable,” said AOC. “Fully agree,” said Cruz.
Within an hour of delisting the stocks, Robinhood received over 100,000 one-star reviews on Apple’s App Store and the trading app’s users took to Twitter to express their disgust at the decision.
I can’t pretend to understand all the nuances and layers of this story, which encompasses complicated stock market machinations that are way above my head. But the narrative you are left with is that Robinhood failed to live up to its brand name in that it initially helped facilitate the poor to take from the rich, but then changed the rules halfway through and effectively restored the institutional status quo.
Are these “meme” stock instances classic pump-and-dump operations of the type characterized in movies such as The Wolf of Wall Street, just carried out via new and very different channels?
Or is it simply another example of the power of the crowd demonstrated by recent events such as the insurrection at the Capitol on 1/6 or K-Pop stans’ social media drowning out of #millionMagamarch and disruption of President Trump’s rally in Oklahoma?
It was certainly a wakeup call for all segments of the Wall Street ecosystem. While social media is monitored by exchanges and regulators, it seems they are not fully up to speed with the way users are communicating and on which channels.
As Nasdaq CEO Adina Friedman noted to CNBC on Wednesday, with a mastery of understatement: "Regulators kind of have to catch up with the technology that's now available.”
The lesson for communicators and marketers is that they have to constantly stay up to date with where consumers and stakeholders are hanging out. Clearly you can no longer expect to reach your audience by monitoring a few big TV channels and mainstream newspapers.
Whether it is Reddit, TikTok, Facebook, Instagram, Clubhouse, Telegram, Twitch, Caffeine, Steemit or even Parler, every PR pro needs to understand these environments, how they’re evolving and mutating – and how, why and whether you need to engage with them.
Meanwhile, back in the Twittersphere, AOC was unimpressed with Cruz’s gesture of solidarity over Robinhood, so it seems normality has been resumed on that front as well: “I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out.”