French Financial Markets Authority publishes CAC 40 study finding younger investors and neo-broker clients are most sensitive to social media

The French Financial Markets Authority has published a study on how social media influences retail investors trading CAC 40 stocks in direct holdings. Using transaction reporting data covering January to November 2024 and measuring activity on X through daily message volumes and sentiment, the study finds that retail investors generally buy on price declines and sell on price rises, and tend to trade more when volatility increases. It also finds that investors react more to the volume of social media messages than to whether those messages are positive or negative. The strongest social media sensitivity appears among investors under 35 and clients of neo-brokers. These groups tend to underreact to fundamental information such as price levels and issuer communications, while overreacting to increases in social media messaging. Where higher message volumes lift activity across investors, their response is about twice as strong as that of other groups. By contrast, clients of traditional banks are the least sensitive to social media, while clients of fully online banks appear better able to adjust their behaviour to fundamental information. The AMF links the findings to its investor-protection work, particularly efforts to encourage younger investors to rely on rigorous, reliable and diversified sources of information before investing.