How Financial Influencers Shape Market Sentiment
- Editor
- Oct 7
- 6 min read
by KarNivesh | 07 October, 2025
In today’s digital world, financial influencers, or “finfluencers,” have changed how regular people invest and think about money. These creators post advice, opinions, and analysis on platforms like YouTube, Instagram, TikTok, and X (formerly Twitter). Their growing influence has made them an important part of how markets move and how investors make decisions.
The Rise of Financial Influencers
Finfluencers are not always certified financial experts. Many built their reputation by sharing personal success stories and breaking down complex topics into simple, engaging videos. They make finance more approachable for young investors who might otherwise find it confusing or intimidating.
The industry of influencer marketing itself is massive. It was worth around ₹83,000 crores in 2020 and is expected to grow to nearly ₹24,90,000 crores by 2025. This rapid rise shows how much people now rely on social media for financial learning.
Where They Share Content
Different social media platforms serve different purposes for financial influencers:
YouTube (34%) – Used for long, educational videos and detailed analysis.
Reddit (22%) – Popular for group discussions and community advice.
Instagram (21%) – Combines visuals and lifestyle to make finance more appealing.
TikTok (18%) – Great for quick tips and short financial lessons.
X/Twitter (15%) – Focused on real-time news and market updates.
By spreading content across multiple platforms, finfluencers reach wider audiences and tailor their messages to fit each platform’s style.
How They Influence the Market
Financial influencers grow faster than most other kinds of influencers — about 6% per year, compared to 3% for general creators. Small-scale influencers (10,000–100,000 followers) tend to have the strongest audience engagement — about 6.9%, compared to just 2.6% for those with millions of followers. This means smaller creators often have a more loyal and trusting audience.
These influencers use storytelling, emotional connection, and simplified explanations to build trust. Studies show that 24% of people who see finance-related posts on social media end up buying the promoted assets, compared to just 7% who don’t see such content. That shows just how persuasive finfluencer content can be.
Global Impact and Investor Behavior
In India, a 2025 SEBI survey revealed that 62% of retail investors admitted to being influenced by financial personalities on social media. That’s a huge number in a country where millions trade daily through online apps. In Canada, 35% of retail investors said they followed advice from social media, but these investors were also 12 times more likely to be scammed.
Younger generations are especially influenced. Nearly 48% of Gen Z investors learn about investing from social media, with YouTube being the top source. This shows that social media will continue shaping how future investors think and act.
Market Reactions and Examples
Social media doesn’t just influence opinions — it moves markets. Studies found that 23.8% of trading volume changes can be explained by social media discussions. However, trades made because of social media hype tend to perform 1.6–2.8% worse than others. That’s because people often buy too late, after prices have already risen due to online buzz.
The GameStop Case
One of the biggest examples of social media’s power was the GameStop short squeeze in 2021. Discussions on Reddit’s WallStreetBets community drove GameStop’s stock from around ₹1,660 to ₹33,200, a 2000% rise in weeks. At its peak, it even hit ₹40,089, almost 190 times higher than its earlier low.
The event happened because small investors united online against hedge funds that had bet against the stock. While some early buyers made huge profits, many latecomers lost money when prices crashed again. It also made regulators realize how risky social-media-driven trading can be.
Elon Musk’s Tweets
Another famous example is Elon Musk, whose tweets regularly affect financial markets. When he tweeted “funding secured” in 2018, Tesla’s stock jumped 11%, leading to SEC action. His tweet adding “#bitcoin” to his profile pushed Bitcoin up 14%, and his posts about Dogecoin increased its price by over 129%. These examples show how just a few words from an influential figure can move billions of rupees in value.
How Retail Investors Make Decisions
Studies show retail investors now control about 20% of all market volume, but they often make decisions too quickly — spending only 6 minutes on research before trading. Social media encourages fast, emotion-based decisions, often driven by FOMO (fear of missing out). Many investors see mostly positive or promotional posts, creating an echo chamber that reinforces risky choices.
Despite this, 93% of investors say they trust the finfluencers they follow regularly. This trust is built through consistency, transparency, and relatability. However, when influencers hide paid promotions or make unrealistic promises, that trust quickly erodes.
Exposure to finfluencer content also changes how investors think about risk. Many young investors become more willing to take big risks — especially in volatile assets like cryptocurrencies — without having the knowledge to manage those risks effectively.
SEBI’s Regulatory Action in India
India’s Securities and Exchange Board (SEBI) took major steps in 2024 to regulate finfluencers. The new rules require registration for anyone giving financial advice or making return claims. It also bans collaborations between registered market intermediaries and unregistered influencers, and requires a 3-month delay on live market data for educational videos.
These laws immediately reduced brand deals by 40–60%, forcing many creators to shift focus from stock tips to general financial education. A major case involved Asmita Patel, known as the “she-wolf of the stock market,” who was fined ₹53.6 crores and banned for giving unregistered investment advice. This showed SEBI’s strong stance on protecting investors.
Global Efforts and Challenges
Other countries are also moving in the same direction. The European Securities and Markets Authority (ESMA) and the UK’s Financial Conduct Authority (FCA) are monitoring how financial promotions appear on social media. However, enforcing such rules is tough since influencers often operate internationally and can easily move between jurisdictions.
While these laws help prevent fraud and scams, they also limit access to free financial education. Some genuine educators have been affected. The challenge for regulators is to strike a balance between protection and education.
The Psychology Behind It
Finfluencers use certain psychological triggers to hold attention and influence behavior. Cognitive biases like the “availability heuristic” and “confirmation bias” make investors focus on the most exciting stories and ignore contrary information. When followers see others praising or “winning,” they take that as proof that the advice works — a powerful form of social proof.
Financial communities on social media also give people a sense of belonging and shared purpose. This can motivate learning but can also lead to groupthink, where people ignore risks. The GameStop movement perfectly illustrated how collective excitement can drive extreme market outcomes.
The Attention Economy
Social media runs on attention — and in finance, this often means sensational headlines. Influencers who promise fast profits or dramatic results get the most views. This creates feedback loops, where popular stocks become even more popular, sometimes pushing prices far beyond real value. Interestingly, research shows that on days when major social media platforms are down, retail trading actually rises — suggesting that social media can sometimes distract more than it helps.
What the Future Holds
Technology is shaping the next wave of finfluencers. Artificial Intelligence tools are helping creators produce advanced analysis and real-time insights. Blockchain could also change how influencers earn and prove transparency. But with these new tools come new regulatory and ethical challenges.
As Gen Z grows older and wealthier, their influence on financial markets will only increase. They prefer learning online and are open to alternative investment methods. This will likely make finfluencers even more powerful — but also increase the need for financial literacy and responsible content creation.
Conclusion
Financial influencers have become one of the most powerful forces in modern investing. They’ve made financial education more accessible but also introduced new risks of misinformation and emotional decision-making. SEBI’s strong actions show that regulation is catching up, but the real key lies in balance — allowing innovation and education while protecting investors.
For everyday investors, the message is clear: learn from finfluencers, but don’t rely solely on them. Always verify facts, diversify sources, and understand that no social media post can replace careful research and long-term thinking.
As the world of finance becomes more digital and interconnected, understanding how social media shapes markets is no longer optional — it’s essential for every investor’s success.
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