Reddit Stocks – The Great Short-Squeeze Story
Much has been written about the recent Reddit stocks short squeeze saga, an ongoing event that raises many fundamental questions about market practices, hedge funds, and the power of the retail trader. Above all, however, the overriding spectacle of the episode centres on whether or not a group of self-proclaimed “r*tards” on Reddit can ‘reach the moon’.
When the dust appeared to have settled, how have the core stocks in question been affected? Lets take a look.
The forerunner of Reddit Stocks;
Gamestop ( GME ) Stocks
GME was, without doubt, the warhead with the heaviest payload (literally) for Redditors. Starting the saga off on January 11th just over two weeks prior to its peak, at a mere $20, the stock saw a monumental rise to a peak of $483. Many thought it could hit $1000 had there not been a seemingly coordinated halt in trading (so seemingly that it has sparked an investigation into possible market manipulation, fun), though a 2816% rise can’t be too disappointing can it?
Over two weeks on from this historic peak, the stock sat around $50, before unexpectedly rising again to $120-170 in the coming week. Read more about its second-wind movement in our recent ‘Gamestop share price (GME) doubled in price… Again?!‘ article.
Why was this? Long story short (…get it?), history repeated itself, or rather the hedge funds decided to once again hyper short GME. This could arguably be due to the insane amounts of money made by some funds both before AND after its peak, though Reddit might choose to ignore this part, or they could simply be trying to cover losses by hoping lightning doesn’t strike twice.
With Gamestop itself currently under new management, the story may not yet be over, as the influx of interest and capital may invoke a corporate revival of the aging brand– a happy ending perhaps?
Other Well Known Reddit Stocks
AMC ( AMC ) Stocks
A worthy sidekick to GME was fashioned by AMC. What became a secondary contender at a far more accessible price, AMC similarly saw a historic rise in the latter part of January. Launching from a miniscule $2.20 on January 11th, the cinema chain saw a peak average of around $20. Not quite the astronomical numbers we saw with GME, though still a healthy development nonetheless.
The saga for AMC plateaued with a similarly deflating landing, with the stock worth only $5.65 two weeks later, like GME sitting at about 1.5x its 11/01 pricing. An argument floating on Reddit suggests that AMC has the potential to be a strong long term investment, with potentially bullish growth following the reopening of cinema theatres in the post-covid recovery.
Nokia ( NOK ) Stocks
A stock that differed greatly to its companion rocket thrusters, NOK neither hit the same heights, nor attracted the same degree of attention. Nokia notably stood in stark contrast to GME and AMC, in that it arguably positions as a fairly decent long term investment in its own right, regardless of any propensity to exploit the missteps of overzealous short sellers.
As a result, this stock saw the weakest short term squeeze of the three, rising tentatively from $3.15 on 11/01, to a comparatively underperforming peak average of $4.40. Furthermore, Nokia was priced at $3.44 two weeks later, a less than 10% rise on its pre-squeeze figure. Whilst this is still an admirable monthly rise for any stock, given the promise, speculation, and ambition touted by Redditors, this won’t be the lunar expedition they were hoping for.
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