Here’s How WallStreetBets Subreddit Is Exploding The Market

February 5, 2021

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By HowMuch. Originally published at ValueWalk.

WallStreetBets is a subreddit suddenly famous for driving individual investors to crowd into and out of stocks, launching several companies on a rollercoaster ride and setting record levels of market volatility. Here’s how 7 picks from Reddit’s WSB have fared over the last several days.

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Gamestop saw the most action in overall price movement, rocketing up from $147.98 on January 26 to $347.51 the next day.
Naked Brand Group witnessed the greatest overall swing in percentage terms, skyrocketing an astonishing +323.08% in only three days.
AMC and Nokia were the first stocks to come back down, immediately retreating off the highs on Jan 26.
Overall, these 7 companies have share prices that are still higher than where they started the year, suggesting either genuine new demand or still have more room to fall.

WallStreetBets Subreddit Causing The Market Saw The Wildest Swing In Stock Prices

We grabbed the daily closing price according to Yahoo Finance for several companies popular on Reddit’s WallStreetBets. We focused on the day where the market saw the wildest swing in prices, January 26, marking where these companies started and ended the day together with the overall percentage change in value. Since a lot of brokerages now offer trading for free, including fractional shares of companies, our approach allows for an apples-to-apples comparison of how volatile these companies have been over the last several days.

GameStop is certainly the most famous pick in WallStreetBets. The stock started the year at $17.25, before rising throughout mid-January to about $40. But things started to take off on January 27, when it closed at $347.51, a record high. That represents a YTD increase of some 1,914%. If you had put $1,000 into GameStop at the start of the year and sold at its peak, you’d net a tidy profit of over $19,000. But then platforms like Robinhood decided to suspend new orders, and as the demand dried up, the price started to plummet. GameStop closed on February 3 at $92.41, still about five-times higher in just over a month. Robinhood is now being sued for its actions, not to mention some high-profile Congressional hearings.

But GameStop is not the only company seeing its share price gyrate “to the moon” and back. AMC shot up over the course of a single trading day, going from $4.96 on January 26 to $19.90 on the following day. AMC then immediately came back down to Earth, recently closing at $8.97. Blackberry (+32.66%), Blockbuster (120%), Macy’s (11.93%), Naked (323.06%) and Nokia (+38.48%) all saw an extreme surge followed by a decrease.

There’s been a lot of reporting about these stock price movements over the last several days, but there is still a lot we don’t know. For example, many Reddit users are saying they are not behind the recent surge in the price of silver. They claim it’s hedge funds trying to make the WallStreetBets subreddit community look bad. It seems much more likely that an uncontrollable mass movement of individuals is moving into and out of assets depending on how they read crowdsourced information. That being said, all of the stocks mentioned in this article are still trading above where they started the year. Either there’s a new populist dynamic in financial markets, or these shares still have a ways to fall before 2021 is over.

Article by HowMuch.net