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Within the securities industry, social media plays a prominent role in influencing investor behavior while providing opportunities for new forms of customer engagement and additional sources of data. The FINRA Investor Education Foundation's 2025 study on how investors evaluate information indicates that 45 percent of investors receive financial advice from the internet and 24 percent reported getting their information from social media.

In addition, 35 percent of survey respondents under the age of 30 reported relying on social media vs. 13 percent of those 65 and older. As more investors rely on social media for financial information, content creation related to investing has proliferated. In addition, market participants are increasingly seeking to harness social media data for market analyses and product development.

In light of these developments, FINRA staff launched a research initiative to assess the impact of social media on investing. As part of this research, we engaged with more than two dozen parties, including financial institutions, software service providers, academics, industry observers and government entities.

An increasing portion of investors report that social media content directly impacts their investing decisions, and social media is particularly popular among younger generations of investors. Social media platforms may provide a faster and more efficient way to disseminate financial information that is in line with the preferences of younger generations. Social media also has the potential to drive collective action in a broad and impactful manner.

This was demonstrated in part by the influence of social media on "meme stock" trading activity. Some financial institutions use social media to help provide general investment information and to market their firm's services. In addition, some market participants -- including FINRA member firms, exchanges, hedge funds and other financial institutions -- view social media as a source of valuable and actionable data that allows them to improve their understanding of the markets.

Some investors rely on various online and app-based platforms to communicate with other individuals or groups about investing. These social media communication platforms may include investing chat groups and forums that: (i) exist on traditional social media channels (e.g., Instagram, Facebook, TikTok, X, Reddit, YouTube); (ii) are featured as part of social media channels focused specifically on investing (e.g., Stocktwits, Seeking Alpha, Estimize, Yahoo! Finance); or (iii) are hosted directly on a member firm's platform.

These communication platforms allow investors to share ideas on investment strategies and opportunities, discuss market trends and their impact on various holdings, post articles, ask questions, and create polls. Using investing chat groups and forums is frequently linked to the development of various trading strategies, including copy trading and meme stock trading strategies. These social media-based communication channels were noted as having a significant impact on market activity.

Market participants are developing a variety of techniques to analyze social media posts in order to gain insights into how the market is likely to move. These techniques include social media data aggregation, which involves gathering and consolidating social media posts into a single, centralized hub, and then processing the data to help identify and analyze social sentiment. This social sentiment is frequently used as an alternative form of data to inform market research and, ultimately, investing strategies.

For example, market participants may rely on these types of social media tools to measure public perception, both for brand management of their own institution and to gauge market trends. Natural language processing (NLP) tools are used to analyze the text of social media posts to identify sentiment, tone, and key themes. These tools may be used to identify potential market-moving events before they occur.

FINRA's research identified several financial product innovations related to social media-influenced investing. One example includes exchange-traded funds (ETFs) that are designed to track indexes that incorporate social media sentiment data. These products allow investors to gain exposure to a portfolio of securities whose composition is influenced by social media activity and sentiment signals.

Social media-influenced investing may provide several potential benefits. First, social media may help democratize investing by providing retail investors -- who may not have had access to sophisticated research tools -- with investment information and ideas. Second, social media may facilitate the formation of investing communities, which may increase investor engagement and education. Third, social media data, when used appropriately, may improve market efficiency by incorporating a broader range of information into asset prices.

Social media-influenced investing also presents potential risks. There is the risk that social media platforms contain inaccurate, misleading, harmful or intentionally false information. Additionally, the potential for coordinated social media campaigns to influence market activity may raise market integrity concerns. FINRA has previously cautioned investors about the risks of relying solely on social sentiment investing tools when making investment decisions.

FINRA's research identified several regulatory considerations. Existing FINRA rules may apply to social media activity by registered persons and member firms. FINRA rules regarding communications with the public may apply to social media posts by registered representatives. Member firms may also be required to supervise social media use by their registered persons consistent with existing supervisory requirements.

Additionally, FINRA's research identified potential regulatory concerns related to artificial intelligence tools used to generate social media content, including the use of deep fakes -- AI-generated images, videos, or audio designed to appear authentic. The proliferation of AI-generated content on social media platforms raises novel challenges for investor protection and market integrity.

FINRA's research on this topic is intended to raise awareness among FINRA member firms and the broader securities industry. FINRA requests comments on all areas of this report, including: (1) the types of social media tools currently being used in the securities industry; (2) the potential benefits and risks associated with social media-influenced investing; (3) the regulatory considerations identified in this report; and (4) any additional regulatory guidance that FINRA should consider issuing.