The Impact of Social Media on Stock Market Performance: Premium vs. Non-Premium Stock Recommendations

Abstract

This study examines the impact of social media influencers on stock market performance, with a focus on comparing premium (paid) and non-premium (free) investment advice. Motivated by high-profile cases such as the GameStop surge driven by online promotion, the research tests the hypothesis that premium influencers provide more reliable and profitable stock recommendations due to their financial incentives and perceived credibility. A sample of influencers was selected from multiple platforms —Reddit, X, TikTok, and TipRanks—based on audience size, communication style, and compensation structure. Stock performance was tracked at intervals of one day, five days, one month, three months, and one year following each recommendation.

The findings reveal clear distinctions between premium and non-premium influencers. Non-premium influencers tend to generate strong short-term gains, averaging nearly 10% after one day, but these returns quickly decline, reaching negative averages within one month. This pattern suggests a reliance on “hype stocks” that lack long-term stability. In contrast, premium influencers demonstrate slower initial growth but produce more consistent and sustained returns, ultimately achieving an average gain of 17.76% after one year—outperforming both non-premium influencers and the historical average of the broader market.

Platform-specific trends further highlight variations in performance, with TikTok and X showing strong long-term returns, Reddit exhibiting consistent underperformance, and TipRanks providing stable but modest results. These findings suggest that both influencer type and platform significantly affect investment outcomes.

Overall, the study concludes that premium influencers offer more reliable long-term investment strategies, while non-premium influencers may benefit short-term traders but carry greater volatility and risk. The results emphasize the importance of careful influencer selection and independent research when using social media as a tool for stock market decision-making.