Retail Investor Trends: Revisiting the impact of retail activity

Just when you thought you were done explaining how the stock market works to all of your friends, GameStop and AMC shares start rallying again as the Reddit message boards move back into the spotlight. At this point, everyone should just assume retail investors are controlling the market and the whims of Robinhood traders drive your stock price, right? There's no question understanding what component of your capital flows and current ownership stem from retail investors is important for any IR program, but our team analyzed our available capital flows since late 2019 to identify just how much of an impact this group has had on trading volume. The key takeaways - retail investors have remained a surprisingly consistent % of market volume over this time, despite recent headlines, though their impact on volume is considerably larger for small cap companies compared to large and mid caps. While volumes have not necessarily been elevated over this time, the group has had a bias towards buying vs. selling, leading to an overall increase in total ownership across our sample set of $17T in equities. So while awareness of your retail ownership is important, particularly for smaller companies, institutional and hedge fund investors as a whole remain the primary drivers of stock prices and larger IR priorities overall.

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Christopher Blake Director, Research and Analysis

Brian Manalastas Senior Associate, Research and Analysis

Richard Harrisberg Associate, Research and Analysis

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.