REDDIT OR NOT?

It was an unprecedented week in the stock market as several stocks led by Gamestop (GME) soared in value based on the collective efforts of retail investors. Gamestop (GME) is a retail chain of brick-and-mortar stores that sells and trades video games. Earlier this year its prospects looked grim. Investors’ diminishing appetite for old school retail was only exacerbated by COVID-19 fears. This past August the stock was trading around $4 per share. Around that time, South Florida’s own Ryan Cohen, the co-founder of Chewy, an online pet-supply company that sold for $3.5 billion to PetSmart in 2017, spent

$76 million dollars accumulating

9 million shares of GME and joining the board. This helped the price of the stock rise to $19 by the end of the year.

Gamestock became a hot stock on Reddit’s Wallstreetbets forum where investors share investment ideas. Hedge fund Melvin Capital, a notorious short seller, drew the

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561-998-9985 ire of the forum for their history of making money when companies do poorly. When retail investors decided to collectively buy Gamestock shares the price rapidly increased over the last week from $46 per share to over $500. Melvin Capital and others who were short the stock were required to buy it back which further exacerbated the spike in the stock price.

Reddit investors who are comprised predominantly of small retail investors were jubilant in their ability to turn the tables on the institutional investor who has until now seemingly possessed an unfair advantage over the little guy. By Thursday the stock hit a price of

$500 per share. Other stocks with large short interests were also targeted by the Wallstreetbets forum. The members were urged to invest in AMC Entertainment (AMC) a brick-and-mortar movie chain which went from $3.5 to over

$20 per share and Express Inc (EXPR) a retail clothing company went from $1.17 to over $12 per share. Several other stocks surged as well despite having no fundamental reason to justify such a large increase in share price.