Reddit board Wallstreetbets seems to have driven a near-2,000% rise in the stock price of troubled video game retailer.
A meteoric rise in the share price of GameStop has trained the eyes of stock market watchers on a fast-growing Reddit discussion board called Wallstreetbets, where it appears that 20-somethings armed with, MooMoo and TradeStation are targeting stocks to soar and hedge funds for takedowns. The drama sent GameStop shares up nearly 2,000% at one point in less than a month. On Wednesday, the stock price of the troubled retailer of video games soared yet again, this time up more than $200, to surpass $350 a share. GameStop’s stock price fell a bit closer to earth on Thursday, dropping by about a third, or about $115, to $235. But that’s still up from the mere $14 a share GameStop had commanded in December. While GameStop shares have been a favorite of Wallstreetbets members, it’s a money-losing company that has been closing stores amid years of slumping sales and been a target of hedge funds and so-called short-sellers who wager that the shares of particular companies will fall. Wallstreetbets members have fought back by vowing never to sell, egging each other on with posts urging to buy more shares and attacking critics of their favorite stock. Andrew Left, a noted short-seller who had predicted GameStop’s demise, last week stopped commenting on the company,. Now, Wallstreetbets members appear to be widening their aim to focus on other companies that, much like GameStop, the rest of Wall Street has left for dead. Shares of former phone maker Blackberry, LaCroix seltzer owner National Beverage and troubled movie chain AMC have also soared in January after mentions on the Reddit board. At a time when viral online movements are having a growing influence on real-world events, including the deadly storming of the, some are describing the Wallstreetbets saga as the stock market’s conspiracy-peddling equivalent. Wallstreetbets is Occupy Wall Street meets QAnon, goes the thinking. Its posters talk about taking revenge on the hedge funds they insist have secretly controlled Wall Street and hail their recent triumphs as a win for the 99% over the wealthiest 1%. “Hedge fund managers live in the past, and continue to look down upon the retail investors,” wrote one Wallstreetbets commenter on Wednesday. “This is the world they want to live in. This was the past.” Adding to the interest: fantastic claims of overnight riches. One prominent Wallstreetbets member said he turned a $50,000 investment in GameStop into $22 million, mostly in the past few weeks, and that his GameStop fortune had soared to a mind-boggling $48 million as of Wednesday night. Kevin Roose, a New York Times reporter, tweeted on Monday about a chat on Wallstreetbets that included a “prepubescent kid” saying he had made $15,000 on GameStop that day by trading on his brother’s investment app. It’s all reminiscent of the day-trading boom in the late-1990s when many retail investors saw their portfolios soar but were ultimately wiped out by the dotcom bubble. Only this time it may involve young investors who weren’t even born in the late 1990s. One caveat: Reddit, like other internet discussion boards, is an anonymous environment. That means it’s virtually impossible to know whether the people chatting on Wallstreetbets are actually buying shares, who they are, if they are truly making money off their trades, or if they are even people and not bots programmed to pump up the trading talk. Some have called the clash over GameStop a classic fight between David and Goliath. But Wall Streeters, stock promoters and even CEOs have been known to talk up investments in internet discussion boards and other venues in decades past, so there is no way to know if this is actually a case of Main Street winning one over Wall Street. Following is what we do know about Wallstreetbets, GameStop’s astounding rise, its “short squeeze” of hedge funds that had bet against the company’s shares, and whether “meme stocks” are the new dotcom bubble.
