Bloomberg: Online Investing Forums Are Driving Stocks Like Gamestop ‘to the Moon’

REUTERS/Shannon Stapleton
REUTERS/Shannon Stapleton

In a recent article, Bloomberg outlines how the popular Reddit forum WallStreetBets, along with help from other online investing forums, successfully increased the value of retailer GameStop’s share price by massive amounts.

GameStop has seen its stock price skyrocket by over 500 percent so far this year, and most of it appears to be thanks to a popular Reddit subreddit called WallStreetBets. For those investing in the company, it’s been a fantastic year, but many short-sellers betting against the company are baffled by the stock’s performance.

Bloomberg News reported on the situation, writing:

Short sellers have been called a lot of things. Bloodsuckers. Parasites. Other words not fit to print. Now in the vortex engulfing GameStop Corp., they have a new name: the establishment.

It’s a role cast for them with relish by their chat-room usurpers, the tens of thousands of average Joe day-traders whose fervor for a left-for-dead retailer has become a self-fulfilling prophecy in its 245% rally this year. GameStop has become a money geyser for the options-obsessed crowd that gathers in Reddit’s WallStreetBets forum. For those wagering on a decline, it’s been a catastrophe.

Give credit where it’s due. In their frenzy, WSB’s cocky hordes have managed to turn the tables in a game short sellers invented, spinning gold from the complacency of others. Before this year, GameStop was a cash register for bearish traders, who borrowed and sold more shares than the company issued. Hedge funds had been winning so long that they overlooked the tinderbox they were creating should sentiment turn.

Now it has, violently. GameStop, which isn’t expected to turn a profit before 2023, has seen its market value triple to $4.5 billion in three weeks, burning the skeptics whose any attempt to cover is likely to further propel its ascent.

One short-seller negatively affected by this situation is Citron Research’s Andrew Left. Left said in an email to Bloomberg News on Monday: “Price movement aside, I am most astounded by the thought process that goes in to making these decisions. Any rational person knows this type of trading behavior is short lived.” Last week Left issued a plea to GameStop stock buyers, stating “look at valuations,” which are by some measures stretched.

CNBC’s Jim Cramer said on Monday that the power of the internet is bringing individual investors together to crush Wall Street hedge fund and financial firms in a trend he believes is just beginning. “It’s the ‘wallstreetbets’ people.′ And they have ganged up, arguably allowed by free speech purposes, to center on a few stocks,” said Cramer.

Part of GameStop’s stock success has been the addition of Chewy co-founder Ryan Cohen to the company’s board. Cramer commented on this stating: “GameStop, arguably the reason why they’re in it, this fellow Ryan Cohen did a great job on Chewy. This is the paradigm. You’re going to see it with Bed Bath & Beyond, using a Loop upgrade. You’re seeing it for Adam Aron’s company, AMC.”

Shares in other companies that WallStreetBets have focused on are also skyrocketing with Bed Bath & Beyond shares jumping by more than 40 percent to over $40 early on Monday. Cramer commented: “It’s not necessarily froth here. It’s the mechanics of the market are breaking down. It’s arguable that these people [buying these stocks] are all one group. But my securities lawyer said, ‘Free speech covers it. They are using arguments that they think hold up under scrutiny. I don’t think they do. But it doesn’t matter what I think.”

Read more about Reddit’s influence on the stock market at Bloomberg News here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or contact via secure email at the address lucasnolan@protonmail.com

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