![]() Its number of active users has dropped from 22 million to 14 million, and its stock trades at around $10 after cresting at close to $60 a year ago after it went public. As stock markets fell and Covid stimulus cash dried up, so did Robinhood’s business. Once the favorite trading platform of meme traders, Robinhood is in trouble. ![]() One clue that this rally is different comes from the last is Robinhood. “There isn’t a fundamental reason for a lot of these price moves,” Dusaniwsky told the Guardian. “On Wall Street they call trying to profit despite this as ‘picking up nickels in front a steamroller’,” he writes.Īccording to Ihor Dusaniwsky, managing director at S3 Partners, the movement of the meme stocks is not coming from the Reddit board traders but from larger retail investors and the meme-traders are in a sense along for the ride. As a result, stock prices of troubled companies can explode upwards at any moment if investors will pay more. But the fact is that – as with any asset – they are worth what people will pay for them. So many investors have bet that the shares in all these companies are worth zero, argues Jared Dillian, editor and publisher of the Daily Dirtnap. GameStop’s stock finished the trading day up 104%.īut according to an analysis by Bloomberg, the meme-stock return is evidence that they have unusually explosive properties. In February last year, he tweeted a picture of a McDonald’s ice-cream cone alongside a frog emoji, sending traders on a search to decode its meaning. His meme-filled posts are scrutinized by his fans – even when they are almost impossible to decipher. Last week a user under the name of TheDude0007 explained on WallStreetBets that “this run is just beginning” and name-checked Ryan Cohen, founder of e-commerce company Chewy and chair of GameStop.Ĭohen, known as a “meme-lord” for his influence over investors, was one of GameStop’s original boosters before taking on its chair. This time too there are parts of Reddit’s investment community that are all in on the rally. That time around the Reddit board was filled with memes about traders with “diamond hands” – unafraid to take bets against conventional wisdom. “Non-fundamentally focused market participants” is an apt way to describe traders at the height of the pandemic meme-stock frenzy. ![]() Although social media chatter surrounding the stocks has increased, dueling hedge funds are also playing a part. This time, the battle may not be between younger day-traders flush with government stimulus checks and informed by online forums like Reddit’s WallStreetBets. “This frenzied move has been driven by non-fundamentally focused market participants,” Baird analyst Justin Kleber wrote in a note to clients. None of the three are considered winning bets in any conventional sense, and the rise in Bed Bath & Beyond came days before its stock was downgraded by the ratings agency Baird. Movie-theatre operator AMC Entertainment saw a similar bounce, while GameStop – the struggling US computer games retail company and perhaps the most baffling of that era’s stock darlings – bumped up close to 25%. Between late July and early last week, shares of Bed Bath & Beyond, a home goods store that has decidedly seen better days, had more than doubled. By February the meme stock craze was unraveling and older heads were smugly smiling again. Indeed, the frenzy came close to bankrupting a number of hedge funds. Many small investors then felt like they had hedge funds and big institutional investors on the run. GameStop shares rose from $3.25 in April 2020 to $347.50 in late January 2021 – a rise of 10,692%. ![]() Last year all three companies were at the center of a meme-fuelled “revolution” in investing as Gen Z and millennial investors piled into the stocks having apparently spotted something Wall Street had missed.
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