AMF Study: Social Media Has Greater Influence on Young Investors and Neo-Broker Clients

France's financial regulator, the Autorité des Marchés Financiers (AMF), has published a study examining how social media influences retail investors trading CAC 40 stocks, finding that younger investors and neo-broker clients are significantly more responsive to online discussions than other investor groups.

The research analysed trading activity between January and November 2024, comparing transaction data with the volume and sentiment of posts on X (formerly Twitter). It found that retail investors generally buy when share prices fall and sell when prices rise, while trading activity also increases during periods of higher market volatility.

One of the study's key findings is that investors react more strongly to the volume of social media posts than to whether those posts are positive or negative. Younger investors and clients of neo-brokers were the most influenced by social media activity, showing larger increases in trading when online discussions intensified. In contrast, customers of traditional banks were less affected and more likely to base decisions on company disclosures and market fundamentals.

The AMF said the findings support its investor protection strategy, highlighting the need to strengthen financial literacy and help retail investors distinguish between social media trends and fundamental market information as online platforms play an increasingly important role in investment decisions.