Could crowdsourced financial analysis replace the equity research by investment banks?

Equity research is gaining popularity in crowd-sourced information sharing platforms. This study analyses S&P 100 companies stock recommendations and user-contributed articles published on Seeking Alpha platform over a three-year period; and investigates whether investment banks' rating consensus or the sentiment of single-ticker articles published by Seeking Alpha contributors can predict future abnormal returns more accurately. We find that both analyst groups underperform the market. Trading strategies based on the sentiment of the opinion articles perform worse than trading strategies designed around the recommendations of security analysts. Analyst recommendations are expected to remain relevant, there is no immediate pressure from crowd-sourced equity research for changing the business model.