Reddit Traders May Help Markets in Long Run, Canaccord CEO Says

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Canaccord Genuity Group Inc. Chief Executive Officer Dan Daviau sees a silver lining to the Reddit trader phenomenon that has roiled markets in recent weeks.

The turbulence in some stocks caused by retail investors who strategized on Reddit message boards and executed their trades through online platforms including Robinhood Markets is a “relatively short-term anomaly” that won’t have a material effect on Canaccord’s business, Daviau said in an interview.

But over the longer term, more participation in the stock market may help increase liquidity, which would in turn boost market efficiency, Daviau said. Also, those traders’ ability to disrupt other investors’ strategies may help curtail excessive risk, he said.

“If it keeps investors more prudent in terms of shorting, if it discourages naked shorting, that’s a good thing and it could add stability to the marketplace,” Daviau said.

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