Add live chat rooms to the list of places young investors pay for stock advice.
Popular trading apps and social media platforms including Reddit, TikTok, and YouTube have helped create a wave of amateur traders online. Now, applications that host live chat rooms dedicated to investment topics are also attracting large audiences.
Chat startups like Discord Inc. and Telegram Messenger Inc. attract users looking for faster, real-time conversations with other investors as they follow market trends or seek investment advice. Conversations often begin with a user asking a general question about a stock or announcing that they are buying or selling a stock. Colleagues in the group, focus group leaders, or other staff then respond. Conversations tend to go faster than message board exchanges, are more private, and can be more engaging than pre-recorded videos. Discord servers, for example, use invite links and can’t be searched and found as easily as communities on Reddit.
Discord debuted in 2015 as a messaging service for gamers, but has since tapped into a larger audience of people with common interests, including music, technology, and now, investing. The company, which claims to have more than 140 million active users, has recently attracted suitors including Microsoft Corp. Discord has ended these discussions and is considering an initial share offering.
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While Discord offers its free chat service, some users in the investment-themed communities on its platform gain access to their groups through subscription fees paid through third-party payment services that Discord does not control. These fees generally vary between $ 20 and $ 100 per month. Subscription fees also purchase perks like trading alerts and opportunities to follow and get advice from community affiliated traders who give advice on how to execute a trade and their opinions on certain stocks. . On Telegram, meanwhile, people are also talking about actions on user-managed channels. Some channels charge a fee to track transactions or receive alerts on things like movements in the forex market.
Clubhouse, a fast growing live audio chat app, on the other hand, has plenty of dedicated investment rooms, but for now there is no charge. The people who run these conversations are trying to create followers who could potentially get them paid for their advice on the app.
Of the thousands of Discord and Telegram communities dedicated to stock investing, the Wall Street Journal has reviewed more than a dozen with user numbers typically less than thousands, but up to over 100,000.
Telegram and Clubhouse did not respond to requests for comment.
“Finance is one of the many topics that has grown in popularity on the service,” a spokesperson for Discord said. “We’re always excited to see the creative and unconventional ways people use Discord, and that includes the wide variety of personal finance discussions, from investment clubs and day traders to students and professional financial advisors.”
Discord is more popular in the United States than Telegram. Anthony Bartolacci, director of sales, financial institutions at analytics firm Sensor Tower Inc., says Discord’s recent growth is largely driven by the same forces that have fueled mobile gaming – people trapped in their homes by the pandemic and looking for something fun and interesting to do. . The company’s active mobile users for March were up 75% from the previous year, according to Sensor Tower. In January, Discord ranked # 2 behind
for the average number of minutes spent by adult US users on social media, according to Verto Analytics.
The growth of trading-focused live chat apps could mark the start of a large shift among younger consumers towards messaging-based apps for more types of financial services, says Elliot Goykhman, CEO and founder of Zelf Inc., an exclusively digital company. banking startup that runs on four chat apps, giving customers the option to use messages, buttons or voice commands to perform basic banking tasks such as sending money, checking balances, creating invoices, etc. Zelf, an American financial technology company that operates in Europe through a Latvian subsidiary, plans to offer its services on Discord and iMessage soon. Since its launch in August 2020, Zelf has attracted more than 500,000 registrations from consumers who receive digital cards once their country is covered by the service. Over 70% of those who sign up are Gen Z or were born in the mid-1990s to early 2010s.
Many investment-oriented communities using Telegram and Discord post disclaimers stating that they are not registered investment advisers and are not qualified to provide financial advice. Some who charge a fee say they provide entertainment.
“Our website and social media profiles are for entertainment purposes only,” Eagle Investors says on its Discord server, a community of nearly 100,000 users. Eagle’s user fees start at $ 37 per month for access to its trading chat, stock and options alerts, and “strategy and education.” The community also warns users under its disclaimer: “Never invest in any security or cryptocurrency featured on our adult site or in our emails unless you can afford to lose your entire investment. ”
A smaller community that uses Discord, Next Gen Investors, with over 4,000 members, focuses on high-risk options trading and charges $ 26 per month to follow community leaders such as Tyrell Dukes, 25. Mr. Dukes studied financial management at university and is one of four men in their twenties to found and lead Next Gen Investors. Mr. Dukes says he and his colleagues don’t make trade recommendations; Instead, he says, community members pay to receive alerts about executives’ investing games as well as basic options trading explanations.
Another benefit that users enjoy, says Dukes, is access to a community of like-minded investors to increase engagement and build a support system. According to Dukes, investors who use Discord and other social media platforms gain knowledge to make informed decisions, pay lower fees and generate higher returns than paying a financial advisor to manage their portfolios.
“This is a new wave of investors,” says Dukes. “I think you’re going to slowly start to see these traditional advisers die” because of these online communities.
Not surprisingly, many financial advisers dispute this prediction.
“There is no threat to the wealth management profession when it comes to business communities because, when done right, the value that comes from working with professionals is deeply rooted in individualized financial planning and personalized financial advice, ”said Douglas Boneparth, president of New York-based Bone Fide Wealth LLC, a millennial-focused financial advisory firm. “Investments are only part of people’s financial lives.”
Jacob Gold, associate professor of finance at Arizona State University who also runs a financial consulting firm, says that without the guidance of an experienced advisor, young people who see exceptional stock transactions online could end up damaged in the long run. term because they will see big. earnings are a normal phenomenon. “The more someone earns 30% on a day off
or Tesla, their behavioral finance is starting to assume that’s just the way people invest, ”says Gold. This can cause people to take riskier bets and get burned. “I’m sorry for the people who buy into it because it’s a false hope,” he says.
Corrections and amplifications
Clubhouse is a live chat audio app. A previous version of this story incorrectly called the Clubhouse Software Inc. app (Corrected May 5)
Mr. Holger is a journalist for the Wall Street Journal in Barcelona. Write to [email protected]
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