TikTok exploded in popularity over the past few years. Of course, the pandemic and the resulting government restrictions on movement partly facilitated TikTok’s rise. People moved online since it was the only space they could interact with friends and family, and investing-related content immersed as one of the most popular content on social media. One reason for this development can be attributed to the droves of younger people trying out the USA stock market for the first time (CNBC news).
Nowhere is this more evident than on TikTok. The app has been the leader in stock and investment content on social media. Thousands of novice investors flock to the app seeking stock-market education and advice. As a result, the app has increased investing and stock market awareness among the Gen-Zs who “see a generational-buying moment instead of risk ” in the USA stock market. In this post, we venture into how TikTokers changed the USA stock market. We delve into how politicians determine TikTokers’ investment choices on the stock market.
TikTok and the Nancy Pelosi factor in the USA stock market
We witnessed a TikTok frenzy in the recent past through hashtags like #StockTok. TikTok financial gurus encouraging their followers to track USA politicians’ stock trades have partly facilitated the rush into stock market. Subsequently, politicians like Nancy Pelosi have become a defining figure for social media movements of people with a keen interest in the stock market. For instance, videos on ‘how to invest like Nancy Pelosi’ have gained wild popularity on TikTok. A post by @quicktrades duped ‘INVESTING QUEEN’ on TikTok has amassed over 46.9k views. @chrisjjosephs posted alleging, “Pelosi trade alerts hopefully saving people some $$$” the post has gained more than 117.2k likes.
TikTok creators consider Pelosi’s stock trades disclosure a treasure trove. They have increasingly placed her at the centre of TikTok and stock market investing. Creators like @chrisjjosephs have gained huge followers analysing certain stock trade moves in Nancy Pelosi’s disclosures. @chrisjjosephs has even founded a company – the Iris. The company is devoted to USA stock market analyses and showing their users, followers and other people’s stock trades. He invests in stocks based on Nancy Pelosi’s stock picks. “I typically do buy… the next one she does, I’m going to buy.” He has told NPR news.
The Stock Act and the US stock market
Nancy Pelosi is not the only politician making these disclosures. In fact, in 2021, lawmakers made over 4000 financial trading disclosures with over $315 million worth of trade, according to the House and senate stock watcher. Interestingly, the lawmaker owns no stocks or has never traded in stock. Her spokesperson has severally come out in her defence. Stating that the lawmaker does not own any stocks. The trades she discloses are made by her husband Paul Pelosi. So, what is all this frenzy and hype surrounding her on TikTok and other social media platforms?
The US law requires lawmakers to disclose trades made by lawmakers or their spouses within 45 days of execution. While this explains why Nancy Pelosi makes her stock disclosures, it leaves room for unanswered questions as to why so many TikTokers follow her on TikTok and why she has elicited heated debates online concerning the USA stock market.
Nancy Pelosi’s husband is a prolific investor and financier. So, it comes out naturally that a lot of TikTokers follow his moves on the stock market, and subsequently, a lot more say it has worked for them. Timothy Smith argues that interest in mirroring politicians in their stock moves started in the wake of the COVID-19 pandemic. Particularly when we had so many politicians selling their stocks right before the market crashed. Four senators, Sens. Kelly Loeffler, James Inhofe, Dianne Feinstein, and Richard Burr sold hundreds of thousands of dollars in stocks shortly after the senate briefing on the novel coronavirus outbreak in early January 20220 – The Hill. The sales had many talking, arguably kicking off the practice of individuals and in particular novice stock investors using politicians as the benchmark for their stock trade moves.
Top stock market company picks by Pelosi
Some people see it as very unfair that the US government can invest in stocks when they are deciding which industries get what budgets. In fact, there have been a lot of debates doing rounds in the media. People are asking whether the four senators violated the Stocks Act but this is a story for another day. Nancy Pelosi set in particular, off a firestorm with her comment, “we’re a free market economy,” when asked whether members of congress should participate in the stock market trade, “They should be able to participate in that.” she said.
The comments sparked ire amongst regulators and the political class. Out of the firestorm, critics were able to pinpoint the recent netted gains and strong returns in stocks and call options which have been at the centre of the controversial following on social media. Here is the best of Pelosi’s stock picks. since the advent of the COVID-19 pandemic, Pelosi has made great company picks which have placed him at the centre of heated debates therefore making Nancy the centre of focus for many TikTokers interested in the stock market.
Microsoft is among the top valued companies in the world. The company is the world-leading provider of cloud services.
- In march 2021, Paul Pelosi purchased 150 Microsoft call options which valued between $1 to $5 million.
- Moreover, in the same month, the Investor exercised 100 call options that valued between $1 to $5 million.
- In May 2022 pall exercised 10 call options at a strike price of $ 180 value between $50,000 and $100,000.
- On the same date Paul also exercised 40 call option at a strike price of $180 and which valued between $250,001 and $500,000.
Apple inc. is the most valued publicly traded company on the US stock market with a market capitulation of over 2.6 trillion USD.
Paul Pelosi exercised the 100 Apple call option on Dec 2020 at a striking price of $100. The shared valued between $250,000 and $500,000
- In May 2021, he exercised 50 apple call options at the strike price of $100. The shares valued between $100,000 and $250,000
- On January and May 13, Paul exercised 200 call options and a strike price of $100 and $80 respectively.
- Pelosi purchased 50 call option on May 24 valued between $250,000 and $500,000.
- He sold the same 50 call options on 17TH June this year at a strike price of $100 valued between $100,000 and $250,000.
NVIDIA is an AI and computer graphics company known for its high-end integrated circuit chips. The Santa Clara, California headquartered company is valued at $328.63B. Pelosi traded with NVIDIA Corporation throughout the pandemic period.
- On June 3rd, 2021 he purchased 50 call options valued between $1 million and $5 million.
- Additionally, he bought 5000 shares valued between $500,000 and $1 million on July 23rd, 2021.
- Bought 50 call options on the same date valued between $250,000 and $500,000.
- He exercised 200 call options at a strike price of $100. Together the options valued between $1 million and $5 million on June 17th this year.
- Paul sold off all his share in the company valued between $1 million and $5 million.
Tesla inc. boosts a market capitulation of 900 billion USD and it is the largest electric car manufacturing company in the USA.
- Pelosi purchased 25 call options a year into the pandemic in Dec 2020. The purchase went on at a strike price of $500 and was valued between $500,000 and $1 million.
- Moreover, he exercised 25 Tesla call options on march 17th this year at a strike price of $500 which valued between $1 million and $5 million
The Walt Disney Company
The Walt Disney media Company is a leading diversified entertainment company together with its subsidiaries and affiliates is valued at 203.61 billion.
- Paul Pelosi purchased 50 call options at a strike price of $130 on Dec 2021. The purchase valued between $100,000 and $250,000.
- Early on Dec 2020, he purchased Walt Disney Company 100 call options which valued between $500,000 and $1 million.
- He exercised 100 call options this year on Jan 21st at a strike price of $100. The sell valued between $1 million and $5 million
What will be more interesting are the reactions on the US stock market at the disclosure of every move taken by Paul Pelosi regarding these companies. For instance, since Nancy Pelosi disclosed Paul’s May call purchase on Microsoft, the stock is up by a whopping 6%. Furthermore, after exercising his Tesla call options in March, Tesla shares went down by about 0.5%. Similarly, Pelosi exercised her Walt Disney Company call options in January and the stock went up by 2.1%.
It proves that Nancy Pelosi impacts the company shares she trades in through her actions or pronouncement.
Copying the Pelosi approach to the USA stock market
Arguably, Nancy Pelosi’s rise to popularity on TikTok hinges on the belief that the politician has access to privileged information which she uses to maintain her competitive advantage on the stock market. While many economists have downplayed this idea, it keeps spreading on like world fire. Jaime Rogozinski of Reddit’s WallStreetBets forum believes Pelosi is “a good stock picker.” Rogozinski believes that while investors might not be able to replicate Pelosi’s strategy one by one, a little glimpse of what they do will be able to get the investors some of the returns they have been enjoying.
Joshua Bote for SFGATE reports that too many TikTokers look upon Nancy Pelosi for their investment moves. She is “the ideal stock bellwether.” The lawmaker continues to attract so much attention with creators like @chrisjjosephs developing platforms that help push notifications to users whenever a lawmaker makes a financial disclosure. Similarly, Matthew Zwijacz, a financial consultant is considering developing a similar tool that will automatically track politicians’ stock picks. Why? Because he believes politicians have insights into what will likely be a good stock pick. In which other ways have TikTokers Changed the USA Stock Market?
The rise of the Gen-Z investor in the US stock market
A report by money.co.uk shows that with an accessible platform and wider audience reach TikTokers can shape up a generation of young investors who are joining the USA stock market in droves. Indeed, more and more people of the younger generation are joining stock investment incentives. Several factors seem to contribute to this phenomenon. Lower interest rates, disposable income precedent by longer lockdowns, and an increasing hype on stock investing on platforms like TikTok and Reddit are the mani reasons.
In particular, The Guardian reports, TikTok is thus far a world leader in influencing and promoting volatile and activist investing. Thanks to the TikTok space which has helped shape the conversation about stock markets and stock investing. Teens are swarming TikTok to talk about how to start investing.
TikTok spaces like StockTok as known as FinTok or Financial TikTok offer more than 500,000 TikTokers aged 16-25 years a space where they can share and consume financial advice. The spaces make financial education accessible in ways like it has never been done before and consequently creating a hype surrounding finance and investing. As a result, we are seeing a revolutionary trend with more younger people joining the US stock market.
TikTokers are influencing company share popularity in the USA stock markets
TikTok creators create all sorts of content including financial planning and investment. With the vast resources and accessibility afforded to the creators by TikTok, the creators can create vast content capable of influencing and spinning conversations surrounding a given topic and possibly impact the popularity of company shares on the Stock market
A recent study by money.co.uk, for instance, showed that companies like Microsoft, Tesla, Apple, and Amazon are the most searched companies on TikTok. The hashtag #tesla amassed 23 billion views with #teslatok a close associated hashtag, garnering over 2.3 billion views on TikTok. The Movie theatre chain AMC is the second most searched company on TikTok. The hashtag #amc has 1.8 billion views while its close associate has over 26.1 million views. According to money.co.uk, the increasing searches are an indicator that the companies benefit from TikTok investors. Besides, this
The rise of TikTok affected social media stocks
Lastly, the rise of TikTok has had a detrimental impact on social media stocks. This year alone Snapchat’s shares plunged more than 40% in May. The company said in its regulatory filing, that the dismal share performance was a result of the macroenvironment which “has deteriorated faster than anticipated.” The news had the ground shaking. Facebook’s parent company Meta platform went down by 8%, with YouTube and Pinterest stocks falling by nearly 5%. Twitter has faced a similar misfortune. Even after the purported takeover by Elon musk, its share value fell by 5%.
Pointing out part of the ‘macro environment’ Paul R La Monica for CNN business suggests, “Snapchat, in particular, has also been hurt by the rising popularity of TikTok.” Of course, competition is key. Social media platforms survive and live by their user’s metrics. With the focus shifting to social platforms relevant to the younger Gen Z consumer, TikTok presents a new force. The company represents dreaded competition which explains the scepticism in the US stock market and the falling social media share value for other platforms.
Summary, how TikTokers changed the USA Stock Market
TikTokers are shaping the US stock market in great ways. The Stock market has seen large swarms of young investors start investing in numbers that have not been witnessed before. Thanks to TikTok which offers the youngsters the platform to chat about their financial challenges and successes. Amidst the rise in numbers of young investors, many more are looking up to politicians’ moves on the stock market to determine their investments.
Does the trick work? Business experts have dismissed it but creators like @chrisjjosephs prolific TikTok creator and stock trader believe copying politicians’ trading picks works. At the House of Marketers, the leading TikTok marketing agency we keep track of the trends on TikTok. Follow our blog for the latest updates on TikTok news and Trends.
House of Marketers (HOM) is a leading TikTok Marketing Agency. Our global agency was built by early TikTok Employees & TikTok Partners, which gives us the insider knowledge to help leading brands, like Redbull, Playtika, Badoo, and HelloFresh win on TikTok. Want us to convert more of Gen Z and Millennials with TikTok? Get in touch with our friendly team, here.