StockTok Craze

How Trustworthy Is Stock Advice on TikTok?

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TikTok has become a pervasive platform for all sorts of content, from dance videos to financial advice. But when it comes to stock investments, is the advice on TikTok reliable? Our investigation into the StockTok phenomenon uncovers a worrying pattern: much of the stock advice on the platform is not only misleading but also potentially hazardous for inexperienced investors. Let's delve into the heart of StockTok and reveal its true credibility.

How Did We Do It?

We investigated 1089 TikTok videos from well-known stock-related hashtags such as #stocktok and #stocktips. We then evaluated each video based on four criteria: presence of disclaimers, suggesting particular stocks, expected returns on investment, and advice to invest a certain amount of savings or income.

In addition, we classified the content types and looked into the influencers' profiles for disclaimers, qualifications, and self-promotion. 493 TikTok influencers were assessed in total.

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Key Findings

2/3

Nearly 2 out of 3 stock videos on TikTok are misleading.

95%

95% of stock content on TikTok lacks disclaimers.

0.8%

Only 0.8% of TikTokers advising stocks have relevant qualifications.

Tencent is the company most frequently mentioned in misleading TikTok stock content. Nearly 1 out of every 10 misinformative videos mentions it.

The most popular types of TikTok stock content are Trading Tips and Stock Picks. These two types make up half of all misleading videos.

63% of Stock Advice on TikTok Is Misleading

stock-advice-on-tiktok-is-misleading

Our analysis reveals a startling fact:
63% of stock advice on TikTok is misleading. This is a significant concern, considering the platform's extensive reach.

How Impactful Are These Misleading Videos?

Misleading videos have accumulated 194 million views and 21.5 million likes, showing their far-reaching impact, particularly among a younger demographic. The creators of such content have over 107 million followers, demonstrating their considerable sway over financial opinions and decisions.

How Dangerous Is Stock Advice on TikTok?

We observe that 95% of stock content on TikTok has no disclaimers. This leaves viewers vulnerable to risky financial decisions.

Additionally, 36% of the misleading advice pushes viewers towards specific stocks, with Tencent - a major Chinese player in the tech industry - emerging as a frequently mentioned name in about 9% of these videos.

Alarmingly, StockTok content paints an unrealistic picture of potential returns: 22% of StockTok videos imply returns on investment, with an average annual potential return of 600% being advertised.

Furthermore, 7% of these videos encourage viewers to commit a certain portion of their funds or savings into stock investments.

95%
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Do not have a
disclaimer
36%
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Encourage viewers to
invest in a specific stock
22%
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Imply a return
on investment
7%
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Encourage viewers to invest a
certain amount of their
savings or income

Types of TikTok Stock Content That Are Most Misleading

Examining the content types, we find that 26% of misleading videos offer Trading Tips and Technical Analysis, making it the most widespread form of misinformation. Stock Analysis and Stock Picks follow closely behind, making up 24% of the misleading content.

TikTok stock misinformation is not just limited to these areas; it spreads across various aspects of stock investing, including Market News and Trends, Investment Strategies, and even Financial Literacy Education. The chart below lists 8 different types of TikTok stock content according to their percentage of misinformative videos:

types-of-tiktok-stock-content

Only 0.8% of TikTokers Advising Stock Have Relevant Qualifications

A pivotal aspect of this trend is the reliability of the influencers themselves. Surprisingly, only 0.8% of TikTokers giving stock advice have finance-related credentials.

Despite this, these influencers have garnered a total of 3.3 billion likes and more than 107 million followers. Even more troubling is that 70% of these influencers self-promote their services, yet just 10% display disclaimers on their profiles.

tiktokers-advising-stock

Conclusion

The findings demonstrate that a great deal of stock advice on TikTok is not only inaccurate but potentially dangerous for uninformed investors. This highlights the need for improved media literacy and regulatory oversight. As users, it is essential that we cultivate a habit of thorough research, especially when it comes to financial advice on social media platforms. On top of that, it is crucial to seek information from multiple, credible sources and consult with qualified professionals.

Methodology

We crawled the transcripts of 1089 TikTok videos from popular stock-related hashtags such as #stocktok and #stocktips.

Then, we read the transcripts and rated how misleading each video was. If any of these four things were true about the video, it was marked as misleading:

  1. Did not have a disclaimer.
  2. Encouraged viewers to invest in a particular stock asset.
  3. Implied a return on investment.
  4. Encouraged viewers to invest a certain amount of their savings or income.

These videos were also categorized by types of content:

  • Trading Tips and Technical Analysis
  • Stock Analysis and Picks
  • Market News and Trends
  • Investment Strategies
  • Stock Market Basics
  • Financial Literacy Education
  • Personal Experience and Stories
  • Humor and Entertainment

Additionally, the cumulative views and likes of these misinformative videos were counted.

We continued by investigating these influencers' profiles to find:

  • If they had a disclaimer in their bio.
  • If they had finance-related credentials.
  • If they advertised their own services.

A total of 493 TikTok influencers were analyzed.