Reddit is back at it again, specifically the infamous WallStreetBets. And not only is it the same culprit but the same stocks: yesterday, both AMC and GameStop spiked, with AMC up roughly 80% and GameStop 100%. To refresh your memory, Reddit is a website hosting a plethora of online message boards. One of these message boards, named WallStreetBets, is a place where investors gather to discuss stocks and a lot more. From memes to its own lingo, WallStreetBets has become a community of self-proclaimed “degenerate investors” taking Wall Street by storm and surprising the world.
Although their first run was big, with stocks like GameStop flying off the charts (forcing Hedge Funds like Melvin Capital to get bailed out and cover their shorts). WallStreetBets may very well have more tricks up their sleeve. At the root of it, negative sentiment towards Wall Street and big money drives the price of these stocks up, as buying is a method of hurting the rich – who are short on these stocks – and making a profit while doing so. It’s a battle between retail and institutional investors driven by emotion, so any technical analysis or good old-fashioned balance sheets are pretty much useless. The community has not only received tremendous support from the likes of David Portnoy and Mark Cuban, and has seen a massive uptick in membership, meaning that, in theory, more investors will be there to push trading volumes. On the other hand, Hedge Funds will be more prepared next time, and as seen with some brokerages, blocks on buying a new position are not off the table.
Do you think WallStreetBets will be able to continue its rampant rise and mad moves or are their efforts in vain?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.