Investing Tips Are Common on TikTok. Many Are Misleading, Study Says.

TikTok has become a major source of investing content, and a lot of people use it to inform decisions about what to do with their money.

But be warned — “FinTok” is a minefield.

A study from Finra and the CFA Institute published in 2023 found that 37% of Gen Z investors said social media was a big factor in their decision to start investing. Other research has found that TikTok, in particular, is one of the main sources of investing advice for younger people.

Now, a new study released from DayTrader.com, which provides resources and educational tools for individual investors, urges caution when mining TikTok for stock tips.

The study’s authors found that 70% of the financial content they surveyed on the platform was misleading.

To get to their results, author Paul Homes, a financial analyst with over 15 years of experience, searched popular TikTok hashtags including #StockTok, #FinTok, #FinanceTok, and #CryptoTok. He focused on videos that met three criteria: a high view count, included a clear financial claim, and had a mix of finance and investing themes.

“The aim was to get to a final shortlist of 10 TikToks from September that provided a realistic combination of what retail investors are actually watching and then run more detailed analysis,” said editor James Barra.

Each video received an A-F trade for each category, resulting in an overall grade. The study concluded that 70% of the videos received a C or lower, resulting in them being labeled misleading.

To determine each grade, the authors applied a four-part scoring framework to each video:

• Accuracy: cross-checking market-related claims against company data, regulatory filings, and reputable reports
• Risk Disclosure: clarification of potential downsides to the investment or other warnings.
• Oversimplification: accounting for whether the videos clarify relevant time horizons for investments or urge investors to act quickly.

• Educational Value: noting if the clip actually explained a practical investing principle.

  Speaking with Business Insider, Holmes revealed the clear patterns he detected while poring over Fintok videos.

  “It appeared to me they were only interested in getting clicks, likes, hits, revenue in the bank,” he said. “But if they have to live on that advice, would they take the same advice themselves?”

  Holmes seemed skeptical. He recalled one video in which a TikTok commentator discussed the value of compounding interest but also highlighted short-term investing opportunities, essentially offering two contradictory pieces of advice.

  “It isn’t financial advice for most,” he added, adding that the majority of people whose videos he watched didn’t seem to have any qualifications for giving investment advice.

  While some former finance professionals have found a home on TikTok, Holmes himself raised concerns about the backgrounds of many Fintok content creators, and most peddling advice were quite young themselves.

  “Nobody said, ‘hey, listen to me. I’ve got 15 years of analyst experience working for a Wall Street bank.'”

  While discussing the risk that misleading content poses for TikTok users, Holmes urged viewers to look into the creator’s background and to ask questions such as “What’s in it for them?” and “What are they trying to sell me?” when assessing a content creator’s advice to buy a particular stock or crypto.

  The analyst added that the content creators who discussed stocks often focused on popular tech leaders and meme stocks. However, the bulk of the videos he watched focused on crypto, often meme tokens and lesser-known digital assets.