Their bios tout massive returns. They trade calls and puts. They’re Tesla perma-bulls.
Meet FinTok, Gen Z’s version of #FinTwit.
For the uninitiated, TikTok is an app where users post short videos often dubbed with audio clips already uploaded to the app. Users can add text to their videos, record their own audio, and “duet,” or add on to another user’s video. Think Vine, but bigger and more memeable.
In its early days, the app was inundated with videos of users copying viral dances. While those dances remain a mainstay of TikTok content, niches for makeup, politics, and sports have since flourished.
Finance, too, has found its place on TikTok.
The #fintok tag on TikTok has 42.6 million views. #Stocktok has even more: 97.4 million. And TikTok’s audience writ large is massive: In a recently published transparency report, TikTok said “hundreds of millions of people” use the app. Some estimates show that as many as 800 million people are on TikTok, dwarfing an estimated 330 million Twitter users.
The content shared on FinTok vacillates between educational and experiential. Some users share their trading wins and losses, while others focus on teaching investment terminology. In general, these are retail investors, many of whom are day trading. Whiteboards are a mainstay: FinTokers regularly draw charts showing their stock market predictions.
For FinTokers, Tesla’s Battery Day, held Tuesday, carried the weight of a Federal Reserve meeting. Ahead of the event, some users posted their thoughts on what the company might reveal, while others shared simple hype videos showing off their Model 3s. The day, it turned out, was a disappointment: Contrary to FinTok’s expectations, Tesla shares tanked the following day, dropping 10% between Tuesday and Wednesday’s market close.
Some FinTok accounts have all the trappings of a typical hustle-and-grinder: a fancy car, tailor-made clothes, and a bio boasting big returns. Posturing like this can be fruitful. Unlike finmeme Instagrammers or #FinTwit users, a job in the finance industry is rare among FinTokers. Many have leveraged their platforms to make money selling investment courses or eBooks.
Although TikTok itself doesn’t share user stats, by some estimations nearly 70% of its audience is 24 or younger. A quick search of the #FinTok tag shows several prominent users are in their early twenties.
This relatability factor, coupled with the growth of commission-free brokerages like Robinhood and coronavirus-induced stay-at-home orders, has made investing, particularly in options and other complex securities, attractive to young users.
And thus lies danger.
“Think about it like this: you’re an 18-year-old kid talking about stocks and acting like you know what risk management is,” said the person behind @TikTokInvestors, a Twitter account that pokes fun at some of FinTok’s most ostentatious users.
They spoke with Institutional Investor by phone under the condition of anonymity, as they work in the asset management industry.
“You’ve only been investing since April and have only seen a bull market since then,” they added. “Because you’re talking about money, you have hundreds of thousands following you because everyone wants to make money. You get this power very quickly… Nobody is going to call them out on their bulls***.”
Take, for example, @kriskrohn. Kris Krohn is a Gary Vee-style motivational speaker who offers mentorships on real estate investing.
On TikTok, he recommends that followers forgo investing via a 401(k), calling the accounts, “fake funny money,” that you “can’t use” and “can’t invest.” Instead, he advocates that his 250,000 followers invest in real estate.
Here’s the rub: Krohn was the subject of a 2012 Securities and Exchange Commission complaint for fraudulently offering and selling real estate investments. The court ruled in the SEC’s favor, and Krohn had to pay a $75,000 fine. He did not return a phone call and email seeking comment.
“That stuff is really scary,” @TikTokInvestors said. “Everything about it is really dangerous to me.”
According to others, this type of misinformation is rampant on FinTok.
“A lot of them have nothing in their bios establishing their expertise,” one TikTok user, Scarlett McCarthy, said by phone. To run a hedge fund, she noted, there are rules and regulations necessary to invest. “You can’t just show up.”
McCarthy said she joined TikTok hoping to watch videos about personal finance, but instead found a lot of misinformation on investing.
“There are, in general, a lot of the day traders on TikTok,” McCarthy said. “Their message is, ‘do minimal work for maximum profit’. I feel like so much of the content is geared around quitting your job and making so much money.”[II Deep Dive: If You Think Wall Street’s Panicking, Check Out Online Forum Wall Street Oasis]
And thanks to the threat of a TikTok ban in the United States, follower counts keep ticking up.
Earlier this month, the Trump administration threatened to bar TikTok downloads from both the Apple and Google app stores over privacy concerns. The move was delayed by a week when Walmart and Oracle stepped up to make an offer for the business.
Right now, the Department of Commerce’s website still says that the prohibition on the app has been delayed through Sunday at midnight. But it’s unclear whether an app store ban will happen. A spokesperson for the agency did not return a phone call and email seeking comment.
“It has created more engagement because they don’t want to see their favorite FinTokers leave,” said @TikTokInvestors.
Despite concerns about misinformation, @TikTokInvestors is hopeful that legitimate financial educators can carve out a niche on the platform.
“I think there’s going to be a path on TikTok where you have real professionals teaching real things,” they said. “There are going to be people who come from this who are going to learn and grow as investors from a young age.”