TikTok Financial Influencers Successfully Predict AI Stock Rally

TikTok 'finfluencers' accurately called the AI rally, but credibility concerns dog them

Let's take a look at that last set of advisors -- the "finfluencers" -- as there popularity, especially among young investors, has been growing and could supersede that of traditional investment advisors. While the idea of investing based on advice from someone on Tiktok appears risky -- maybe not as much as investing based on astrological signs -- these "finfluencers" have had quite a solid track record in the first half of 2024. The investment theme for the first half of 2024 was dominated by an outsized focus on the tech industry, especially on stocks that are a part of the artificial intelligence value chain. Brokerage aggregator site BestBrokers analyzed the 20 most-watched stock-picking videos on TikTok from 2023, that recommended shares that could potentially surge in 2024. The team then tracked the prices of the recommended stocks from the day the videos were posted up until June 21, 2024. It also calculated returns on a $1,000 investment in each stock or ETF recommended in these videos. "Our findings show that over 64% of the 87 total stock predictions in these videos came out accurate, including the remarkable rallies of AI stocks such as Nvidia and Qualcomm," the BestBrokers report from July said. About 36% of the recommendations resulted in losses. The report said that a majority of the influencers had advised picking stable, blue-chip stocks such as Google, Nvidia and Amazon, something that traditional money experts also advise to people looking for less risky investments. The most profit that an investor could have generated from a single stock would have been Nvidia, which grew 63.08% in the period surveyed. An investment of $1,000 in the stock would've grown to a substantial $1,630.79. On the flip side, a $1,000 investment into the worst performing stock -- New York-listed biotech company Ginkgo Bioworks Holdings -- would have fetched a 74.74% loss. What if one decided to cut the risk by not betting on a single name and, instead, diversified by purchasing all stocks recommended in a single video? If a person invested $1,000 in every stock recommended in the one video that got the most bets right, the gains would have amounted to $4,860. However, "[this] would require a $23,000 initial investment in 23 different stocks, some profitable, some not so much." On the other hand, putting money into all the stocks recommended in the video that got most bets wrong would have led to a loss of $1,517.

Nvidia-Led AI-Stock Rally Was Got Right By TikTok Finfluencers -- Report Shows 64% Accuracy In Predictions But Question Marks Around Reliability Remain Intact - Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN)

Investing in stocks is serious business, often requiring professional advice or thorough research. However, a new trend sees people turning to social media, especially TikTok, for investment tips from 'finfluencers,' raising concerns about the reliability of their advice. What Happened: A report from BestBrokers found that over 64% of the stock predictions made in the 20 most-watched stock-picking videos on TikTok in 2023 turned out to be accurate, including significant rallies in AI stocks like NVIDIA Corp NVDA and Qualcomm Inc. QCOM. "Our findings show that over 64% of the 87 total stock predictions in these videos came out accurate, including the remarkable rallies of AI stocks such as Nvidia and Qualcomm," the BestBrokers report said. The report found that most influencers recommended blue-chip stocks like Google's parent company Alphabet Inc. GOOGL, Nvidia, and Amazon.com Inc. AMZN, similar to traditional financial experts' advice for lower-risk investments. Experts interviewed by CNBC, such as Gerald Wong of Beansprout and Jeremy Tan of Tiger Fund Management, expressed skepticism about the reliability of these finfluencers. They noted the broader U.S. stock market performed well during the study period, which may have influenced the results. See Also: Trump-Era White House Official Anthony Scaramucci Says Industry Leaders Want Bipartisan Commitment On Crypto Regulation: 'We Don't Want To Fight Any Side' Jiang Zhang of First Plus Asset Management highlighted concerns about the unregulated nature of these influencers and potential conflicts of interest. Despite these warnings, experts acknowledged that finfluencers help spread financial literacy among younger investors. Why It Matters: The rise of financial influencers on platforms like TikTok comes at a time when financial literacy in the U.S. is alarmingly low. A report from the Global Financial Literacy Excellence Center revealed that the average American scored just 48% on a financial literacy test, with only 16% scoring between 75% and 100% in 2024. Personal finance expert Suze Orman has also highlighted the issue, estimating that 95% of Americans struggle with financial literacy. This lack of knowledge makes the public more susceptible to misinformation and potentially harmful financial advice from unverified sources. The credibility of finfluencers has been questioned before. In 2023, Indian social media finance personality Ravisutanjani Kumar was criticized for allegedly falsifying his educational credentials, casting doubt on the authenticity of many online financial advisors. Read Next: Mark Cuban Gets An Assurance Out Of Chuck Schumer: Will Pass 'Sensible And Long-Lasting' Crypto Law By Year-End Image Via Shutterstock This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote Market News and Data brought to you by Benzinga APIs