Vaynermedia CEO and Co-Founder Gary Vaynerchuk speaks at the Brand U event on the Nasdaq MarketSite.
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The newfound influence of Reddit users on the stock market is just a microcosm of what’s to come in the technology age, advertising guru Gary Vaynerchuk told CNBC on Wednesday.
“You see the maturity of the Internet for yourself. I think people are incredibly naive about how early we are in all of this,” VaynerMedia CEO told Fast Money. “I see us as cavemen and women in the digital age.”
Vaynerchuk said he doesn’t see the Reddit-sparked GameStop frenzy as just a one-off event thanks to the connections social media users can build online.
Social media has democratized talking, and commission-free trading, a service powered by the Robinhood Brokerage app, has democratized investing in stocks. Vaynerchuk, who early recognized and invested in emerging companies like Twitter and Uber, believes that the future of virtual reality and blockchain technologies will only enable the public to do more to disrupt traditional business practices.
“I think it’s changing because people who see the power of community building can focus and influence, and we have to adjust to that,” he said.
The comments come a day before GameStop shares surge and the events related to the frenzy last month will be the subject of a hearing in Congress on Thursday. Market activity, in which GameStop’s share price rose from under $ 30 to $ 483 in two weeks, and the subsequent transaction restrictions that stockbrokers like Robinhood had put in place during volatile trading, created ripples across Wall Street.
Since peaking on Jan. 28, GameStop stocks have hit the ground again. The price of $ 45.94, which closed on Wednesday, is 90% below its high during the peak of trading. AMC Entertainment and BlackBerry were two other stocks that Wall Street betting supporters had left behind over the past month. These stocks fell more than 60% from their highs during the trading rush.
Although the volatile trading period has subsided, Vaynerchuk suggested that individual investors’ passion for stocks lingers.
“I think it’s not a mystery, it’s not an anomaly … it leads to alternative investments and people are looking at different trades right now,” he said. “There is always a backlash and the internet brings people together and the masses have a lot of power.”
Retail investors and new entrants have used online media, particularly through the now well-known Wall Street Bets forum on Reddit, to exchange information and share ideas. The practice of using social media to coordinate investment movements surprised investment professionals when traders put brief pressure on various so-called meme stocks, including GameStop.
The House Financial Services Committee hearing will include testimony from a well-known retailer, the heads of Robinhood and the hedge fund Melvin Capital, who at the time was a high short position at GameStop and was burned because of the soaring stock market, among other things.
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