Getting financial advice from social media may be more risky than you think, according to a recent study.
Some 70% of videos offering investment advice on TikTok are "misleading," according to a study released by trading online resource platform DayTrading.com on Monday.
DayTrading.com evaluated 10 finance videos from TikTok on accuracy, disclosure, oversimplification and educational value. The videos were selected based on their view count, their clear financial claim and to reflect the diversity of themes. They were selected from a pool of videos gathered using popular finance hashtags, such as #StockTok, #FinTok, #FinanceTok, and #CryptoTok.
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Only 10% of videos scored an A in risk disclosure, while 30% received an F, the study found. Most creators suggested that following their advice was guaranteed to yield positive returns, the study's author and DayTrading.com contributor, Paul Holmes, said.
Still, the study found that the most common problem with finance TikToks was oversimplification, with 40% of videos scoring a D and 20% an F. No video scored an A.
Only 20% of the videos earned an A for educational value.
As for accuracy, most, 40%, received a C while only 20% got an A.
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Cyptocurrency-themed videos are among the most popular TikTok finance content categories, but were the second-most misleading, the study found. The category scored D in accuracy, F in disclosure, D in oversimplification and F in educational value, an F overall.
"If you’re watching Finance TikTok, remember that hype beats accuracy in the algorithm," Holmes said.
DayTrading.com said the study was not intended to tell people to avoid financial TikToks altogether but to help them spot red flags and curate their feeds carefully.
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View claims of guaranteed returns with skepticism, the study said. The study also said users should be wary of videos that offer solutions without details like time horizon, fees or downsides. TikToks should be used as inspiration for deeper research, rather than being taken at face value, the study added.
"It's worth remembering that for most viral creators, Finance TikTok is a business model," Holmes said. "The goal isn't just to educate you – it's to capture your attention and funnel you into courses, paid communities, or broker affiliate links. That doesn't make all monetization bad, but it does mean you should always ask: ‘Why is this person giving me this advice for free?'"
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