Finfluencers Report

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Tweet-level data from a social media platform reveals high dispersion and systematic bias in the quality of advice by financial influencers, or “finfluencers”: 28% of finfluencers are skilled, gener- ating 2.6% monthly abnormal returns, 16% are unskilled, and 56% have negative skill (“antiskill”) generating −2.3% monthly abnormal returns. Antiskilled finfluencers have more followers and more influence on retail trading than skilled finfluencers. The advice by antiskilled finfluencers creates overly optimistic beliefs most times and persistent swings in followers’ beliefs. Consequently, fin- fluencers cause excessive trading and inefficient prices such that a contrarian strategy yields 1.2% monthly out-of-sample performance.