Retail investors who fueled the meme-stock craze are now becoming a resource for hedge funds and asset managers, thanks to a new partnership between Intercontinental Exchange Inc. (ICE)and Reddit Inc.
The agreement will allow ICE to develop data products using the vast troves of Reddit posts, comments, and videos. The goal is to analyze trends and sentiment in real time, offering institutional investors an edge in market strategy.
“If we can capture the sentiment of posts, along with the changes, that becomes a valuable piece of information,” said Chris Edmonds, ICE’s president of fixed income and data services. ICE, which owns the New York Stock Exchange, will initially roll out the service to hedge funds and asset managers, with plans to expand access over time.
Reddit, known as the epicenter of the meme-stock phenomenon, saw retail traders drive up shares of GameStop and AMC, leading to massive hedge fund losses on short positions. Since going public last year, the platform has grown to 101 million daily users generating over 22 billion posts and comments.
“The conversations that take place on Reddit on any given day or any given minute can offer a real-time look at the news and trends that are happening around the world,” said Jonathan Flesher, Reddit’s VP of Business Development.
With market sentiment playing an increasing role in trading strategies, institutional investors may soon rely on Reddit as a key data source.