Securities Market Conditions: the Phenomenon of the Influence of Private Investors by Means of Social Networks

Abstract

The key trend in the development of the securities market in 2020–2021 was a record inflow of retail investors. At the same time, the increasing number of private investors on the stock market is accompanied by their active use of social networks. The development of social networks enables private investors to establish communication with each other, pool capital and develop common strategies, which ultimately increase the influence of individuals on the stock market dynamics. A review of modern economic scientific literature has shown insufficient coverage of the issue of social networks impact on the securities market. In this connection, the authors made an attempt to investigate such precedents to systematize them. The article presents the dynamics of the number of private investors and their share in trading turnover, gives reasons for the expansion of retail investors presence on the securities market, considers statistics demonstrating the breadth of the Internet and social networks penetration into various spheres of citizens' life. Cases of market manipulation through the actions of private investors in social networks were analyzed and summarized, as well as government regulators’ reaction to such actions was revealed. A number of risks associated with social networks influence on investment decisions by private investors are identified and recommendations for their protection and leveling the negative background of social networks are proposed.