This study examines the influence of social media, specifically Reddit’s r/WallStreetBets forum, on retail investor behavior and the stock market during the GameStop short squeeze.While previous research highlights the influence of online forums like r/WallStreetBets, traditional lexicon-based sentiment models misclassify due to slang, sarcasm, and lack of financial domain training. To address this, the study applies a context-aware, prompt-based sentiment framework using large language model on Reddit posts from r/WallStreetBets between December 15, 2020 and February 28, 2021, alongside intraday GameStop data from FirstRate Data. A non-autoregressive Long Short-Term Memory (LSTM) model is used to test predictive power across three stages: price-only data, price plus Reddit activity, and price plus Reddit sentiment. Findings show that while price data provides a baseline, incorporating Reddit activity improves accuracy, and adding net sentiment (positive minus negative) delivers the strongest predictive performance, particularly in bullish phase, highlighting the role of herd behavior, coordinated narratives and information cascades. These results demonstrate that online collective sentiment predicts price dynamics and can amplify speculative trading, sometimes at the expense of retail investors. The study offers methodological advances and practical insights into how social media-driven trading affects consumer decision-making and market volatility.

Accepted Oral Presentation