GameStop: Incredible Rally May Not Have Been Boosted by Gang of Rebel Redditors Alone, Analysts Say
- GameStop: Incredible Rally May Not Have Been Boosted by Gang of Rebel Redditors Alone, Analysts Say
The sharp price rise in the shares of the ailing video games retailer GameStop seen last month may have been triggered by institutional investors rather than by Reddit’s army of retail traders, data revealed by JP Morgan show.
“Although retail buying was portrayed as the main driver of the extreme price rally experienced by some stocks, the actual picture may be much more nuanced,” JP Morgan global quantitative and derivatives strategy analyst Peng Cheng wrote this week, in a research note addressed to the bank’s clientele.
The prevailing narrative was that a group of Reddit users had launched a flash mob, gobbling up GameStop’s shares. The campaign resulted in GameStop’s stock price growing over 1,800 percent, forcing a short squeeze by big hedge funds that had to cover the negative bets or risk catastrophic losses. Back then, the step washed billions of dollars out of the biggest hedge funds, with media outlets proclaiming the victory of amateur traders over the Wall Street sharks.