Sunday, May 19, 2024
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Pop culture, like blockbuster movies and our obsession with celebrities, can impact everything from the clothes we wear to the food we eat. And, as new data shows, it can also influence the stocks we buy. Investing platform Public’s recent retail investor report found that while retail investors continue to become more nuanced in their investing strategies, cultural trends play a large part in shaping some investors’ decisions.

Compiling user data from the Public’s investing platform and responses to three surveys with roughly 1,000 respondents each, the company found that big cultural moments like the Barbie film release and a recent Bud Light advertising controversy have grown the number of new investors in those brands’ respective parent companies.

The number of investors on the Public platform in Mattel stock grew more than six times larger after the success of Barbie. Similarly, the number of Public investors in AB InBev — Bud Light’s parent company — grew by 1.5 times amid backlash and a boycott from conservatives after transgender influencer Dylan Mulvaney promoted the beer on Instagram.

How culture influences investing strategies

Cultural phenomena influence retail investors because the investors watch the changes unfold in their daily lives, says Katie Perry, general manager of investor relations at Public. In the case of Barbie, she says “they saw the lines at the theaters, they paid $25 for the ticket, they bought an outfit — it was all very tangible.”

“It’s a clear business success story, and it alerted people that this company is something you can invest in,” Perry adds.

While Bud Light’s recent cultural moment was much more negative for the company, leading to a 10.5% revenue decline in the second quarter of this year, AB InBev also saw a boom of new investors on the Public platform. Perry explains that moments like the ad controversy can still inform investors’ decisions because investors realize that they can take ownership of a company like AB InBev.

“There are so many companies that you can invest in and there are always those that people didn’t even know were part of a parent company or didn’t even know were publicly traded,” Perry says. Investors may not have previously realized that AB InBev is the parent company of Bud Light, for example.

The cultural awareness of retail investors can help a company around its initial public offering (IPO), as, when it debuts on the public market. The Public report found that the famous social media company Reddit is the expected IPO investors are most interested in, with search queries on the Public platform up 130% for Reddit between the first and second quarters of 2023.

“If you’re a consumer brand, you’re automatically at a huge advantage among retail investors,” Perry says.

Retail investor strategies continue to mature

While many retail investors got their start during the height of meme stocks or as a pandemic pastime, they have become more robust in their strategies, according to the report. Investors in Public increased the number of distinct assets they own — like exchange-traded funds (ETFs) and Treasury Bills — by 25% year-over-year, for example.

Even beyond pop culture and big news stories, Perry says that investors are taking a greater interest in macroeconomic signals and have generally become more enthusiastic about the research of investing.

“We’ve seen an uptick in interest in macroeconomic data, which seems to counter everything you might think about retail investors,” Perry says. “They’re thinking less like ‘this is me managing my portfolio,’ and more broadly like, ‘I’m managing this within a universe of other things happening.'”

The Public report also notes that retail investors are digesting events like recent regional bank collapses or the artificial intelligence (AI) boom and using them to inform their investing beyond just buying stocks. More than 19% of retail investors are now using AI for investing research, for example, and national banks have seen a 70% increase in net new investors in early 2023 as retail traders capitalized on the regional bank turmoil, according to the report. Earlier this year, fellow investing platform eToro published a report that found that more than 4 in 10 investors have expressed interest in or are already using AI to alter their portfolios.

It’s worth noting that financial advisors tend to recommend focusing your investing efforts on the long-term as opposed to jumping on trendy investments. Timing the market or putting all your money in stock because its brand or product is popular is risky, and you want to ensure your stock portfolio is diversified with investments in large, small, domestic, and international companies, as well as stocks across various sectors.

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