Reddit's GameStop traders are now driving up stock in AMC, Blackberry, and more

Cal Jeffrey

Posts: 2,790   +700
Staff member
In context: A short squeeze is when a group or class of investors buy up shares of a company they see as undervalued because other investors are betting it will fail. This activity is legal as long as the purchasers do not rally a stock by misrepresentation. In that case, it is called a pump-and-dump scheme and is illegal.

Day traders belonging to a Reddit group continue to squeeze short-sellers on Wall Street by vacuuming up even more stocks that are expected to fail, including AMC. The struggling theater chain closed at $5 per share on Tuesday. As of this writing, the stock is trading at $19.90β€”a nearly 300-percent gain in under 24 hours.

GameStop has been struggling for a while and is likely to go bankrupt before long. In fact, many investors are short selling shares in a bet that it will fail. However, it is this exact situation that has made it a prime target for a short squeeze.

We reported earlier this week, members of the subreddit r/wallstreetbets have been actively buying up shares in GameStop and encouraging others to do the same. As these day traders pick up the stock on the cheap, it drives the price up. This uptick starts a chain reaction as short-sellers are forced to cover their shorts at a loss.

As more short bets bow out, the price soars even higher, creating a domino effect. Before the squeeze, GameStop was trading steadily at around $18 per share. Yesterday it closed at $147.98, and as of publication, the stock is valued at $347.51.

Business Insider notes that the group now appears to be going after similar "prime" targets like AMC, Nokia (up 45 percent), BlackBerry (up 41 percent), and Bed Bath & Beyond (up 31 percent). Whether these companies see the same huge spike that GameStop has experienced remains to be seen. It mainly depends on how many investors pick up the stock for a quick win and how many shorts on the company's stock are out there.

Before you entertain the notion of jumping into this crazy Wall Street game, be warned: It's not a get-rich-quick scheme. A squeeze is very volatile. These falsely inflated values will crash eventually, and there will be losers when that happens. Unless you get in early and get out at the right time during a squeeze, it is easy to lose your money. So don't bet what you can't afford to lose.

There is also the possibility that the SEC will get involved at some point. So far, it does not appear that the Reddit investors have done anything illegal, but it is easy to see how a squeeze could turn into a pump-and-dump, so be careful.

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psycros

Posts: 3,331   +3,743
Its amazing watching the site regulars get in on this scam. Like watching a bunch of schoolkids solemnly relating their experiences snipe hunting.
 
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Nestea

Posts: 64   +21
This shapes up to be the best year in a while. too many πŸš€ : wsb, btc, eventually hw prices will settle. or not since everyone's riding on πŸš€ , gamers will be in charge of gamestop (that's some hilarious ****).
I mean who would've thought that out of all companies it's gonna be gamestop. tell me this isn't the best year ever.
 

Plutoisaplanet

Posts: 380   +526
BIGC is another mid-cap stock with some pretty volatile trading lately, it's up 50% in the last week with no real news. Their short interest was only like 16% though.

If anyone is looking for a Shopify competitor to invest in, BigCommerce is it. Its market cap is 20x less (aka much more room to grow), it's growing crazy fast, and it's a very good option for traditional businesses trying to sell online (ie. Ben & Jerrys, Skullcandy, ChapStick, 5-Hour Energy, Nikon Canada, Vodafone UK, Royal Dutch Shell, Sherrilltree, Sharp Electronics all use BigCommerce). Plus it's an American company based in Austin whereas Shopify is based in Canada. I'm waiting for it to get closer to $60 before I buy some more.
 

Uncle Al

Posts: 7,981   +6,754
Trying to "time" the market is a very foolish endeavor mainly because when it turns on a dime there is no way for you to unload your stock fast enough UNLESS you have a seat on the big board as a speculator or a day trader. All those stock sites that claim you have instant access to buying / selling are just pulling your chain so BEWARE of following these kinds of stocks. They are there to draw in the suckers, take their cash, then dump 'em. Won't be long now, you can hear the clock ticking down .......
 
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Bulllee

Posts: 144   +110
I bought a second hand 580 nitro at the back end of last year.Paid Β£I40 for under protest and thought I'd been robbed blind.
Haven't seen same go for less than Β£270 lately which actually bursts the bubble of most bubbles.
 
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QuantumPhysics

Posts: 4,366   +4,665

These Internet Trolls think this isht is a joke that during a pandemic Game Stop (^133%) , AMC theaters (^ 301%) and Bed Bath & Beyond are up 8000%
πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚

It's 10:52PM and in after hours trading, Game Stop is already fallen below $300.
 

terzaerian

Posts: 521   +678
These Internet Trolls think this isht is a joke that during a pandemic Game Stop (^133%) , AMC theaters (^ 301%) and Bed Bath & Beyond are up 8000%
πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚πŸ˜‚

It's 10:52PM and in after hours trading, Game Stop is already fallen below $300.
Wow you seem really invested in this. Got something to lose?

You'll just write if off on your taxes anyway. Like your ****ing Netflix.
 

brucek

Posts: 712   +945
TechSpot Elite
Where was this crowd when I was working for a couple struggling companies, I would have loved for them to come in and inflate the value of my options by 10x or so.

Also, if all the scalpers and miners currently focused on buying 3080s could switch to hunting GME shares for a while, that'd be great too.
 
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ypsylon

Posts: 276   +158
And they call crypto currencies speculative bubble?

How Stock Exchanges / hedge funds work instruction manual:

1. Nothing.

2. Hype!

3. Profit! (if you're quick and sneaky enough)

4. Crash!

5A. Repeat. (if you still have some assets left)

or

5B. Destitution (if you have no more assets left)
 
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