How Reddit Sentiments Influenced Gamestop Stocks

Abstract

This paper focuses on the language usage in the GameStop (GME) share rally in January 2021. Specifically, I analyze how comments in a leading post of Reddits r/wallstreetbets subreddit reflect the reddit user communitys sentiment and emotion with various linguistic expressions. I analyzed the topics of the comments using topic modeling with Latent Dirichlet allocation algorithm, which objectively identified representative topics in the comments. Results showed that there were six clusters of topics, including two of the topic clusters that represented words that were highly correlated with stock market behaviors, such as buy and sell, one cluster that suggested objective analyses of the stock market, and one cluster that presented complaining emotions. The findings indicate a direct correlation and impact between the sentiments of comments and the performance of the stock market.