![]() You could pay an analyst to tell you what stocks to buy, or you could create a Reddit account and follow forums like WallStreetBets. That technology has democratized investing, giving armchair investors far removed from traditional banks free access to sophisticated trading instruments, like options. The way people trade stocks has been upended by the rise of no-fee apps like Robinhood. The hashtag #SaveAMC was trending on Twitter.īoth AMC and GameStop spiked so rapidly Wednesday they triggered automatic halts designed to protect against volatility. Shares of the new WSB plaything were up more than 200% Wednesday after members of the Reddit board and investors on Robinhood were touting the stock. ![]() Not just GameStopĪ similar story was playing out with shares of AMC, the movie theater chain that’s been devastated by the pandemic. On Wednesday, the stock was trading around $111 a share, up from about $17 at the beginning of 2021. The reason is two-fold, both of which are far removed from anything related to the company’s fundamental strength: Investors following the Reddit group bought a ton of GameStop options, and short-sellers had to buy shares to cover their losing bids. This week, it rose another 18% then 93% and more than doubled today. The next week, it surged 10% twice and 51% another day. But this wasn’t a normal, momentary stock surge. GameStop’s stock rose a little less than 13% that day. Investors liked that Cohen brought digital experience to the table, something the largely brick-and-mortar GameStop desperately needs, as video games go digital and malls continue their unending slump into irrelevance. The GameStop stock surge began for a legitimate reason: The company announced on January 11 it had added three new directors to its board, including Chewy co-founder Ryan Cohen. That said, some investors have argued that GameStop was seriously undervalued, especially when video games have become staples of the stay-at-home pandemic era. Sales growth is sluggish because gamers no longer need to go to the mall to buy games or consoles. The company is expected to lose money this year and next. It’s not hard to understand why someone would short GameStop, however. If you’ve ever played craps, these are the guys betting against the table, and their tactics, while often lucrative, have burnished their reputation as bloodsuckers and other, unpublishable, names. The popular Reddit page WallStreetBets is fond of targeting short sellers. Welcome to the Reddit market: Wall Street Bets board is driving some unlikely stocks
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