Several memes actions burn the ticker. You could be on a retirement bet or an erasure
Representation image | Photo credit: Getty Images
Highlights
- Same stocks turn into multi-bagging machines
- AMC Entertainment is 2x in a day; GameStop is up 16x YTD but still attracting retail traders
- Ordinary Wall Street Investors Use Social Media to Boost Stocks
Bombay: You could be a big gamble away from retirement. Or erase all your savings. FOMO investing has become mainstream on Wall Street – thanks to a growing cult of memes stocks. For the uninitiated, these are popular actions on social media platforms like Reddit, prompting several small investors to increase their bets.
The wildfire that was started by Game Stop earlier this year is clearly burning. Obscure names like the AMC Entertainment movie chain, BlackBerry, and the brick-and-mortar Bed Bath & Beyond chain have become multi-baggers this year. Check out these feedbacks.
Returns in 2021
- 16x game stop
- AMC 30x
- BlackBerry 3x
- Bed bath and beyond 2.5x
AMC shares doubled in a single day this week as retail traders rallied to the action. The stock tripled in just one month. The subreddit / wallstreetbets is now debating a BlackBerry case very seriously. You might even want to call them Wall Street vigilantes. But they are making their impact felt.
Samir Arora of Helios Captial had tweeted jokingly: “New Headline of the Day: Bitcoin Dips as Long-Term Investors Focus on AMC.” Could this be the path of equity research? Where do retail investors come to an agreement through a consensual bet, based on social media chatter? Earlier this year, when the GameStop frenzy was at its peak, billionaire investor Chamath Palihapitiya spoke out in favor of smaller players. He called it the “pushback of individual investors against the Wall Street establishment.”
One day, this could very well be a line of research for investment psychology. Where people have thrown out the kitchen sink purely on the basis of social media gossip or the momentum of a stock. Does it go beyond the red lines of the regulations? It won’t be clear just yet, until we see bigger shockwaves. But this group of investors made a strong statement. This retail business is no longer a marginal player. He can build a serious momentum together if he wants to. It has access to global social media platforms that can unite rebel investors around the world. And he also now has access to research that once belonged to large fund companies and family offices. The democratization of financial news and information is here to stay.
Crowdfunding in GameStop has succeeded in bringing Wall Street hedge funds to their knees and investors continue to come back for the highest.