The moment has also been a chance for young investors - many of whom have flocked to investing since the pandemic was declared, causing the stock market to jump, helped in part by free brokerage apps such as Robinhood - to flip the bird at established Wall Street firms. “It’s like the velociraptors in Jurassic Park they get smarter, and eventually they hop the fence,” he said. He noted that millennial investors have been sharing information across Reddit and social networks for years, but the sheer number of them now means they are a force to be reckoned with. “Hedge funds are getting their asses kicked by the retail investor,” Lindzon said. “Any rational person knows this type of trading behavior is short lived,” Left told Bloomberg.īy encouraging everyday investors, also known as retail investors, to buy up GME stock and increase its price, hedge funds would have to sell out in order to cut their losses from having shorted the stock, which increases the stock price even further. In after-hours trading, it jumped another 50%, to over $230. On Tuesday, it opened at $88 and jumped 90% by close. By the end of the day, it was back in the $70s. On Monday, the stock surged again, opening at $96 and then jumping to $159 an hour later, its highest-ever price. Trading of GameStop has halted multiple times over the last week because the stock price has jumped so quickly it’s triggered market protections. In recent weeks, some have declared they were putting their entire retirement and life savings accounts into the company, complete with lots of rocket emojis and declarations that they would not sell. (He subsequently called the Reddit investors an “angry mob.”)īut instead, the GME stock price rose even higher as redditors called on investors to put as much money into the company as they could. He owns at least 13% of the company’s stock and is now on its board, which many took to mean it would move in a more digital direction.īut Wall Street hedge funds, including Citron Capital and Melvin Capital, had shorted the stock, meaning they had bet against it and needed it to drop in price in order for their investments to be successful.Īfter Andrew Left from Citron posted a video last week arguing that GameStop’s share price would soon drop to $20, people attempted to hack his Twitter account. Chewy CEO Ryan Cohen has been pushing GameStop to investors for months. The board may have added a little froth to Tesla Inc.’s $90 billion rally.For months, there has been chatter encouraging WSB day traders - or “degenerates,” as they call themselves - to buy up GameStop (GME) stock. went crazy shortly after being mentioned there. Hitherto sleepy companies such as Virgin Galactic Holdings Inc. But even veteran traders have trouble dismissing a 900,000-user Reddit forum called r/wallstreetbets, or r/WSB for short, whose tips and tactics have shown an uncanny ability to push prices, at least for the short term. The latest sell-off, driven by a new wave of coronavirus fears, shows how quickly markets can turn on you. History hasn’t been kind to people claiming to have a magic hand. Wall Street doubts they’re right, but it’s getting nervous about what it sees there. Some of them think they’ve found the key to fast wins on the stock market. In a dingy corner of the internet is a message board, soaked in profanity, bro-speak, and greed, where posters with handles such as OverthrowYourMasters and yolo_tron campaign for their favorite stocks, putting up screenshots from their online brokerage accounts of their moonshot victories-or showing off their massive losses like badges of honor.
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