Investors on Reddit have launched an attack that’s both trolling and serious on Wall Street firms by purchasing shares in GameStop, pushing the stock price up over 480% in a week, costing hedge funds millions of dollars, and skyrocketing young investors’ portfolios and egos.
Full Answer
Is Reddit trading of GameStop shares market manipulation?
Jan 27, 2021 · GameStop Is Proof That 'The Market' Is a Casino. Hedge fund Melvin Capital needed a $2.75 billion bailout on Monday after the stock price for GameStop, the video game retailer, spiked to more than ...
How did Reddit push up the price of silver?
Jan 29, 2021 · If it trades to $30, you buy the stock for $15 each and sell at the market price. In recent years, options have exploded in popularity on …
Did the SEC charge Reddit for market manipulation?
Jan 27, 2021 · A bunch of individual investors on a Reddit forum, Wall Street Bets, thought they could work together and drive up the stock price. That would force the hedge funds to buy back their shares as their losses increased. So they used the hedge funds against themselves. 2/ — Don't tear down my statue (@kamster999) January 27, 2021
Is Reddit trading leading to'massive market manipulation'?
Jan 27, 2021 · Aimee Dilger/SOPA Images/LightRocket via Getty Images. Investors on Reddit have launched an attack that’s both trolling and serious on Wall Street firms by purchasing shares in GameStop, pushing the stock price up over 480% in a week, costing hedge funds millions of dollars, and skyrocketing young investors’ portfolios and egos.
What exactly did Reddit do to the stock market?
An army of traders on the Reddit forum r/WallStreetBets helped drive a meteoric rise in GameStop's stock price in recent days, forcing halts in trading and causing a major headache for the short sellers betting against it and banking on the stock falling.Jan 29, 2021
Is Reddit stock manipulation illegal?
Section 9(a)(2) forbids price manipulation, making it unlawful to effect “a series of transactions in any security . . . creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.”May 11, 2021
How did Reddit raise the stock market?
Reddit Inc. said it raised $250 million from private investors, riding a wave of attention after users of the social media website drove a stock market frenzy. Terms of the funding, led by Vy Capital, push the company's valuation to $6 billion, a spokeswoman said.Feb 8, 2021
How did Reddit make GameStop stock rise?
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.Apr 26, 2021
Is WallStreetBets market manipulation?
WallStreetBets founder: Meme stock trading isn't market manipulation.Jun 11, 2021
Does Wall Street manipulate the market?
Wall Street manipulated your stock and stole your shares. They know you check the price every day. They know you get angry when you see it dropping for no reason. It's all part of their psychological manipulation toolkit.Feb 11, 2021
Why do Reddit users buy 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.Jan 30, 2021
Did GameStop save Reddit?
Reddit user who helped inspire GameStop mania says he lost $13 million on Tuesday, but is still holding on. Keith Gill, AKA Reddit's DeepF------Value, apparently lost more than $13 million on Tuesday alone from his GameStop bet as the shares dropped 60%.Feb 2, 2021
Why did Reddit Users Target GameStop?
Reddit's AMC, GameStop surge happened because of anger over Wall Street. Commentary: The gains are rooted in disdain for existing financial institutions, tapping into the same emotions as the Occupy Wall Street protests from a decade ago.Feb 1, 2021
How did Reddit stock market crash?
After several big hedge funds bet against GameStop stock, essentially meaning that they would profit from GameStop's failure, a group from Reddit called WallStreetBets took to buying stocks in order to keep GameStop afloat.Feb 12, 2021
What happened with GameStop and Reddit?
GameStop stock climbed by 104% until trading was halted for a second time - moments before markets closed. The rapid rise came as Reddit, the online home of activist investors that led the GameStop movement in January, went down temporarily. The stock gained nearly 90% in after-hours trading.Feb 24, 2021
How did GameStop stock soar?
GameStop shares skyrocketed in January as retail investors, urged on by popular Reddit forum WallStreetBets, bought the stock as a way to punish hedge funds that had taken an outsized short bet against it.Feb 26, 2021
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.
What is the SEC investigation?
SEC Enforcement may be more likely to initiate an investigation if the matter involves any of the following: requires immediate action to protect investors. relates to conduct that may threaten the fairness or liquidity of the securities markets. involves individuals with a history of misconduct.
Is the SEC investigating speech that is not fraud?
There are important First Amendment concerns that can arise when the SEC starts investigating speech that is not fraud. Of course, the SEC has a duty to protect investors. However, it does not believe in momentum trading but instead preaches a much more fundamental approach to investing. The SEC warns that before buying a stock, investors should research the company and its leadership, read its filings, study its markets, consider its price-to-earnings ratios, evaluate its cash generation versus its debt load, review its earnings expectations versus reality, etc.
Why did GameStop go up?
They said the price would go up at least partly because some large hedge funds had sold the stock short. If the price increased, the hedge funds would have to buy the stock to cover their short sales, and that would make the stock price rise more. The price of GameStop did indeed rise.
What is the period when prices of initial public offerings (IPOs) surged?
There was the period when prices of initial public offerings (IPOs) surged, often despite the lack of profits by the companies or even the potential for profits to be generated sometime in the next few years. Some of these companies were called unicorns.
Why was Navinder Sarao arrested?
In 2015, day trader Navinder Sarao was arrested at his home in a London suburb and later extradited to the US on charges of fraud and market manipulation.
What is hedge option?
Retail investors have poured into options, which give them a cheap way to bet on rising stock prices. As a hedge, institutions that sell options typically purchase the stock that’s linked to the option, which provides another source of demand that pushes prices higher.
Why did Tom Hayes go to jail?
Tom Hayes, a former trader for Citigroup and UBS, went to prison for more than five years after he was convicted of rigging Libor—a key borrowing benchmark that determines interest rates of trillions of dollars worth of securities. Banks were fined billion of dollars by authorities in the US, UK, and EU for manipulating the benchmark.
Is GameStop a hedge fund?
The GameStop story, like the financial crisis itself, isn’t as simple as it’s sometimes portrayed. While media articles describe the GameStop sensation as retail traders versus hedge funds, it’s a reasonable guess that algorithmic traders and other sophisticated institutional investors are taking advantage of the share mayhem as well. How much of the price action was truly driven by armchair traders deserves more forensic analysis.
How much did the ATM raise in 2021?
In April 2021, launched an At-the-Market (ATM) equity program to sell up to 43 million shares of Class A common stock and raised approximately $427.5 million before commissions and fees.
Is AMC overvalued?
(Reuters) -Shares of AMC Entertainment surged another 38% in early deals on Wednesday and were set to open at a record high as individual traders on social media forums were unfazed by a hedge fund flipping its stake in AMC, calling it overvalued.
