Reddit Community Fuels Another Run for “Meme Stocks” as GameStop, AMC Climb

Back at the start of the year, a bizarre short squeeze took place with the stock of GameStop and AMC movie theaters. Short sellers aggressively shorted several brick-and-mortar retail locations, betting that global conditions would push those retailers out of business. Online investing communities like WallStreetBets took the aggressive short stances as a direct challenge and turned the situation into a battle of David versus Goliath.

The group, backed by thousands of amateur investors, decided to take a bite out of the hedge funds that were arranged against GameStop and similar retailers. The resulting short squeeze made GameStop’s stock jump extremely high, costing many funds millions of dollars and making a some of the amateur investors a lot of money. And, now, it’s happening again. Sort of.

Meme Stocks Rally Again

Recent movement in the stock market shows GameStop moving again, along with a handful of other “meme stocks,” as they’re affectionately known by WallStreetBets. The popular subreddit serves as a hub for amateur investors, many of whom invest in retail stocks. Posts on the subreddit that gain considerable traction with users can cause stocks to jump unexpectedly, making the subreddit’s posts a topic of interest even for professional traders.

The “meme stocks” that have been seeing the most movement include AMC Theaters, Koss, and Naked Brand. Over 30 such “meme stocks” have been on the move, according to reporting by Yahoo Finance, making this week one of the most volatile since March of 2021 for the subreddit.

Democratization of the Market?

The online communities driving these unusual movements in the market have framed their actions as a natural evolution of the way trading will take place in the internet age. Some establishment firms have taken issue with the way these communities cause disruptions with existing stocks, claiming that the groups can essentially manipulate stock values as a bloc and can make short selling a risky proposition for established investors.

The groups themselves argue that there’s nothing illegal about discussing stock performance online. Indeed, offering suggestions about which stocks to invest in and how to beat the odds on the market is perfectly legal. However, online communities like WSB and Twitter offer a unique platform for communities to make these shifts come about in a way that feels much more populist than previous generations of trading advice.

And, if the last week’s rally of meme stocks is anything to go by, this brand of investing is here to stay.

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