The WallStreetBets forum on the Reddit Inc. website on a laptop computer arranged in Hastings-On-Hudson, New York, U.S., on Friday, Jan. 29, 2021. Photographer: Tiffany Hagler-Geard/Bloomberg via Getty Images
The race is on for hedge funds to better understand how social media is moving markets or risk the same fate as the short-sellers who were clobbered by the rally in GameStop shares.
One way to get ahead of these trends is to more closely track subreddits such as /WallStreetBets, which sparked off the recent buying frenzy and is keeping it rolling with a steady stream of messages telling members to "hold the line" on their investment.
But reading every Reddit post is a tough sell for a hedge fund or institutional investor engaged in high-speed, high-volume trading. That's why brothers Christopher and James Kardatzke, founders of Quiver Quantitative, are suddenly getting a lot of interest from Wall Street.
Over the past few days, the Wisconsin-based startup has gotten a steady stream of inquiries from hedge funds asking about how their technology can help them track social media.
"We've been getting a lot of emails from different hedge funds interested in using our data API to basically get data from /WallStreetBets," Christopher Kardatzke, the chief technology officer for Quiver Quantitative, told cheddar. "They want to make sure there isn't this retail investor interest in what they're taking short positions in."
The company, which provides both free and custom application programming interfaces (API), tracks or "scrapes" alternative data sources such as subreddits, Twitter, and Facebook channels — basically any non-financial source that could be relevant to markets.
Fortunately for the startup, it had been scraping the popular subreddit since early 2020.
Technically, that means it was tracking the number of times certain stocks or ticker symbols were mentioned and whether there was a positive or negative sentiment around those stocks.
Looking at the whole year, Quiver found that the "WallStreetBets Portfolio," a breakdown of the top stocks mentioned positively on the subreddit, was up more than 61 percent, was more volatile than the S&P 500, but outperformed it even through the downturn at the start of the year.
Right now, this data is aggregated on a daily basis, but the startup is working on rolling out a real-time feed within the next few weeks.
"It's pretty basic stuff, but we're in the process right now of expanding that into a live feed to get the most recent comments within seconds," the CTO said.
Kardatzke noted that this will be particularly useful to hedge funds, and will fit well with /WallStreetBets, which features daily posts outlining where members plan to invest the following day.
Soon, he added, Quiver will start looking at language more specific to the subreddit, including option trading terms such as puts and calls.
And while Quiver will likely develop some of these inquiries from hedge funds into client relationships, the company plans to maintain its free platform, which Kardatzke said was originally built to help retail rather than institutional investors.
"It's so relevant to retail investors," he said. "It's data you see in your everyday life. You don't need a finance degree to be able to analyze it or get insights from it."
Kardatzke said that he's conscious that the company could soon be straddling both sides of what appears to be a growing rift in the financial world. The way to remedy that is by making sure both sides are catered to. Retail investors, for instance, want more visualizations and analysis, while institutions want APIs to use for their own analysis, he said.
He said that typically data providers only offer the latter, "but we’d like to do everything we can to make insights from our data available to the public, while keeping afloat."
A Senate bill unveiled on Wednesday looks to tackleonline safety for children by regulating Big Tech and social media platforms to deter users from content that can harm their mental health. Irene Ly, a policy counsel for the age-based ratings and review organization Common Sense Media, joined Cheddar News to break down the potential of the Kids Online Safety Act. "We can't be imposing such a big burden on parents to be doing it all on theirselves," Ly said. "I think you also have to keep in mind that parents often didn't grow up with social media, so they don't understand what it's like to be addicted to social media or really understand how they work."
While many still remain skeptical about the metaverse, big tech firms and even one big bank are ready to expand their virtual worlds. Facebook parent company has pivoted so hard it will now call its employees 'Metamates,' and even JPMorgan Chase has created its own digital lounge on one virtual platform. While the sector remains young, there seems to be significant investment opportunity, especially with companies like Nvidia. Adam Johnson, a portfolio strategist at Adviser Investments, joins Closing Bell to discuss which companies could win in this space, consumer appetite, and more.
Marc Blinder, Co-Founder and CEO of Aikon, joins Cheddar News' Closing Bell, where he discusses how his company is helping businesses use blockchain applications without needing to learn the intricacies of the new technology.
The Federal Reserve minutes from its January meeting are indicating it's sticking to an interest rate hike in March, but what does the report coupled with ongoing inflation mean for investors going forward? Scott Brown, a market strategist at LPL Financial, joined Cheddar News to break down the minutes and talk about how investors might navigate the rest of the year. "it seems like the market is kind of inclined to trade off these headlines, really, through the first half of the year," he said. "And then, oh, don't forget, we've got midterm elections, which always tend to add a little bit of volatility in the second half of the year." Brown noted that the path forward for stock investors in 2022 would be "rockier" than last year.
Season 13 "Shark Tank" contestant Tania Speaks secured a $400,000 deal for her Speaks Organic Skincare brand with "Shark" Mark Cuban while also being named one of the best pitches in the history of the show — all at 19 years old. Now 20, Speaks joined Cheddar News to talk about the skincare line, the clean beauty industry, and the moment that host Cuban was moved by her pitch. "I couldn't believe that he got emotional. I'm surprised I held back my tears that long," the young entrepreneur revealed. "It's just amazing for someone else to be inspired by your story, especially Mark Cuban himself."
The media giant formerly known as ViacomCBS has officially rebranded itself as Paramount Global with a focus on its streaming service, Paramount Plus. Naveen Chopra, chief financial officer at Paramount, joined Cheddar to discuss the company’s name change and streaming wars. "There are components of content licensing that we continue to do, either historical arrangements or opportunities to license content that don't really impinge on what we're trying to do with our owned and operated services and that continues to be an important ingredient in our broader financial model," he said. "But our number one priority is putting our best assets on Paramount Plus." Chopra also discussed theatrical release windows before feature films hit its service and the platform's subscription goals.
The recent 7.5% year-over-year increase in consumer prices is the highest since 1982, and drew some strong reactions from investors, with speculations that the Federal Reserve will hike interest rates by 50 points instead of 25. But other analysts believe that the Fed will stick with its original plan of 25 points next month. Chris Vecchio, Senior Analyst, at DailyFX broke down how the Fed could potentially react to the historically high inflation data.
