One of the immediate consequences of the Reddit saga is that it turned the art of stock predictions on its head. Of course, the concept of forecasting will never go away. But with the equities sector, analysts largely depend on two methodologies: the most common fundamental approach and the technical approach.
Will Reddit change the way we short stocks?
When regular folks’ money is involved, suddenly, both parties see potential votes. Thus, legislation for a fairer and more transparent system could be one of the longer-lasting changes that Reddit has imparted. On the not-so-pleasant side of the spectrum (at least for the short-selling hedge funds), many will rethink shorting stocks.
Did Reddit change the game?
Thus, regulatory oversight into coordinated manipulation across social media is one way Reddit may have changed the game. Here are eight other disruptions to watch moving forward. As crazy as this Reddit saga has been, you want to be careful. Take it from me.
How did the Reddit Army change the world?
Perhaps the greatest change that the Reddit army sparked is that it hardly changed anything at all. Yes, many anonymous Redditers were able to secure funds for noble causes, such as helping their family out of a bind or paying for medical bills. But in the big picture, the GME story is a wealth transfer from one set of jerks to another.
What does the Reddit Saga mean for stock forecasting?
One of the immediate consequences of the Reddit saga is that it turned the art of stock predictions on its head. Of course, the concept of forecasting will never go away. But with the equities sector, analysts largely depend on two methodologies: the most common fundamental approach and the technical approach.
How does Reddit manipulate the stock market?
The “Reddit traders” joined forces to initiate a “short squeeze”; by collectively purchasing massive amounts of GameStop stock and thus driving up its stock price, the traders reaped significant profits and also inflicted huge losses on the hedge funds that had sold short.
How did Reddit increase GameStop stock?
In late January, a band of Reddit-obsessed retail traders coordinated trades on heavily shorted stocks, created a massive short squeeze in GameStop, whose shares surged 400% at one point. The brick-and-mortar retailer traded at less than $20 a share at the start of 2021.
How did WallStreetBets manipulate the market?
The group of bullish traders had been focused on buying stock and placing options on particular companies that hedge funds had been shorting in order to force them into a “short squeeze.” As a result of such an extensive army of traders all buying into these companies within a similar time frame, the WallStreetBets ...
Is Reddit traded on the stock market?
Social media platform Reddit has announced that it has started the process to sell its shares on the stock market.
Why did Reddit users buy GameStop?
Motives behind this onslaught ranged from making personal profit to a desire to squeeze the short positions of hedge funds. Prompted by the information posted on social media retail investors began buying these so called “meme-stocks” including GameStop, AMC Entertainment, Blackberry, and Nokia.
What Reddit thread caused GameStop?
But the main reason behind the interest in the company is because it was the most heavily shorted stock on Wall Street. About 71.66 million GameStop shares have been shorted, worth about $4.66 billion. This is where the very popular 'wallstreetbets' came into the picture.
What did WallStreetBets do to GameStop?
The army of millions of investors from Reddit's WallStreetBets community pushed GameStop shares from US$20 to US$480 during the January “short squeeze”, in which they drove hedge funds like Melvin Capital into heavy losses, after forcing them to liquidate massive bets against the stock.
What drove up GameStop stock?
Shares of GameStop jumped more than 30% to a high of $104.65 on Tuesday. The stock turned sharply higher after Social Capital's Chamath Palihapitiya said in a tweet that he bought GameStop call options betting the stock will go higher. Trading was halted multiple times due to volatility.
What caused the GameStop short squeeze?
The short squeeze was initially and primarily triggered by users of the subreddit r/wallstreetbets, an Internet forum on the social news website Reddit, although a number of hedge funds also participated.
Is Reddit profitable?
Reddit has never recorded a profit. Recent funding rounds (2017 and 2019) suggest it is focused on growth and not profitability. After half a decade of shunning the ad platform, Reddit has begun to invest heavily into it, so we may see it reach profitability by 2022.
Who is invested in Reddit?
In October 2014, Reddit raised $50 million in a funding round led by Sam Altman and including investors Marc Andreessen, Peter Thiel, Ron Conway, Snoop Dogg, and Jared Leto. Their investment valued the company at $500 million then....Reddit.Screenshot Homepage in June 2018Founder(s)Steve Huffman Aaron Swartz Alexis Ohanian18 more rows
How much is Reddit stock worth?
$9.6 billionReddit's Valuation Overview Reddit was valued at $9.6 billion in August 2021, more than triple its 2019 valuation of $2.7 billion.
Why is short selling risky?
If it rises, they have to repurchase the shares they borrowed and then sold for a higher price, which will make them lose money. This squeeze happens often, which is why short-selling can be risky.
What is a stock investor?
Plain and simple, they are investors who bet against a stock, hoping the price will fall. To do this, they borrow shares from someone who plans to stay invested for a long time, and then they sell the shares. After the stock price falls, they repurchase the shares at a lower price and return them to the lender.
What is market integrity?
Market integrity, as it’s known, is something regulators have to take seriously. If too many people lose faith in the market, they could stop investing, and that would prevent companies from selling shares to fund their growth. But we’re far from that. So far, these are pockets of volatility.
Who bought GameStop?
Last summer, Ryan Cohen, who grew and then sold online pet-food retailer Chewy, bought 13 per cent of GameStop and hoped to help management pivot into e-commerce. The stock quadrupled in four months, and that attracted short-sellers.
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