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The activities of the Reddit chatroom r/wallstreetbets may be far from over as more stocks that are being shorted by Wall Street firms may be pumped again.
It is the first day of the trading week and speculations abound that Wall Street may see increased trading activities from the retail investors on the Reddit social media platform. The previous week was marked by a retail frenzy that saw Reddit users organized in the chatroom dubbed r/wallstreetbets buy up the shares of stocks that are being shorted by institutional short-sellers.
These stocks including GameStop Corporation (NYSE: GME), AMC Entertainment Holdings Inc (NYSE: AMC), BlackBerry Ltd (NYSE: BB), and others were pumped to highs never before seen as the retail investors seek to force the short-sellers out of business. GameStop, in particular, soared by more than 400% in the past week, topping out January by more than 1,600% increment.
The activities of these band of investors that was targeted at hedge funds known to take a short bet position with some stocks have inflicted the intended pain. Melvin Capital Management remarkably lost as much as 53% in January with its Assets Under Management plunging down to $8 billion from $12.5 billion about a month ago.
The push in the trading activities by the Redditors was halted after several brokerage firms like Robinhood, TD Ameritrade, and others citing the increasing requirement to shore up holdings to be able to match up with demands for the increasing volatilities of the concerned assets.
Reddit Investors May Target More Shorted Stocks
The activities of the Reddit chatroom r/wallstreetbets may be far from over as more stocks that are being shorted by Wall Street firms may be pumped again. This new trading hysteria is now more than a game as the investors themselves akes a lot of money, at least, if they get in well in advance before the price peaks.
The Reddit board has also grown its membership by about 5 million new subscribers, in what signifies that more people are seeing the alleged revolutionary trading strategy that turned on the fortunes of the firms like GameStop.
“We saw the might of a new investor base, in terms of their ability to shape not just the fortunes of an individual stock but the fortunes of a large market segment like the Russell 2000,” said Sunil Krishnan, head of multi-asset funds at Aviva Investors.
The entire trading activity seen last week has also stirred the highest number of positions covering by US Hedge Funds according to an analysis by Goldman Sachs Group Inc (NYSE: GS). “According to Goldman Sachs Prime Services, this week represented the largest active hedge fund de-grossing since February 2009. Funds in their coverage sold long positions and covered shorts in every sector,” the investment bank wrote in a note late on Friday.
Should the retail storm of the Reddit investors be allowed to thrive this week and beyond, more of these figures are bound to be recorded.