Impact of Reddit Posts on Stock Market Prices
is an internet forum that has amassed millions of
users over the years as it allows people to have discussions
on whatever topic they wish. A sub-forum known as
a subreddit is made available to accommodate people
of similar interests, habits, skills, hobbies, likes,
and even dislikes. For instance, if you have a love
for online casino gambling and the Trueblue
casino login is an everyday routine for you, you're
just a subreddit away from finding people who love
it as much as you do. Other examples include:
Reddit forum is not limited to people within a certain
jurisdiction but it stretches out globally. It provides
a platform for a wide discourse or engagements in
diverse areas that could be entertaining, academic,
or simply leisure.
theres been a debate about how this forum had
begun to influence prices in the stock market. The
exponential increase in its subreddit users of the
famous WallStreetBets or r/WSB for short (with over
5 million users) gave the forum a rather powerful
premise to take on some hedge funders and investors.
In this article, the question as to whether posts
made on the Reddit forum can or cannot influence stock
market prices would be answered.
Studies of Reddit Influencing the Stock Market
video game retailer, although known for its brick
and mortar age dealings, is the most shorted stock
relative to its float in the market. A stocks
float simply refers to its number of shares that can
be traded freely on the market without ownership to
any insider in the company or institutional investors.
Although the company reported a 30% rollover drop
in revenue in the last quarter of 2020, there has
been an increase in their stock for over 1000% recently
as a result of the actions of the r/WallStreetBet
community in the past few weeks.
used to be a top-notch leader in mobile technology
but now, resurfacing in the areas of Mobile Security
Software and Services Company, have decided to make
a partner out of Amazon.com to develop IVY, an intelligent
vehicle data platform that would be able to read and
interpret vehicle sensor data. Although, this step
taken has corroborated their efforts and has driven
their revenue in the last year (2020) up by 15%, yet
a net loss of about $152 million was reported by the
company even as they continued in the struggle. Nonetheless,
thanks to r/WSB as the companys stock has gone
up by 120% in the past months.
AMC Entertainment Holdings
Entertainment Holdings own and operate about 1,000
movie theaters situated in the U.S. and Europe. With
the whole pandemic of last year, social distancing
became the norm in the world and it affected their
business. The WallStreetBet community took the responsibility
of saving the company as they created the hashtag,
#saveAMC, and made it a trend on TikTok, Twitter,
and other social media networks. In the third quarter
of 2020, there was a huge fall of 90.2% in the company's
revenue and they reported a net loss of about $905.8
million. Thanks to the r/WSB, the company's share
price has gone up by about 300% in the past months,
thus, leading its CEO to state that bankruptcy would
be completely off in the next term.
is the type of heavily shorted, small-cap stock WallStreetBet
is usually interested in. They are a struggling mall
retailer and there was a fall in their revenue, up
to about 34% in the last quarter of 2020 which caused
them to report a net loss of about $90.3 million.
However, there has been a squeeze on short sellers
as a result of the intervention of the WallStreetBet
which resulted in a 400% increase in stocks in the
past months. Also, in the past weeks, there has been
a sudden rush on record trading volume even as 15%
of Express floats was held short. Although there
havent been any recent changes made to the companys
Operandi modus in 2021, the r/WSB has resuscitated
the companys stock for the time being.
is a Hydrogen-fuel cell maker and their shares became
an instant hit during the electric-vehicle stock buying
in 2020. This has continued in 2021 as their shares
have maintained a continuous drive up, thanks in part
to the r/WSB. In the past year, PLUGs shares
are up about 1,500% and now in the past month, only
90%. Although not still very much profitable, they
reported a 79.9% revenue growth in the third quarter.
After the stocks rapid increase, shares are
now traded at about 67 times sales suggesting a very
long-term growth ahead.
WallStreetBet community on Reddit is one where everyday
traders discuss their big successes or weakening losses.
No one goes by their real name as they can identify
with an online handle like any other online discussion
board. This subreddit is strictly for matters on stocks
and nothing short of it. It is majorly to brag about
actual or real trades made and not the ones anyone
wished they had made.
make use of the Robinhood, MooMoo, and
TradeStation trading app to make targets of stocks
soar and hedge funds to take down. The users believe
that hedge fund managers are living in the past and
like one of the commenters on the subreddit stated,
"they continue to look down on retail investors."
sudden surge in stocks of companies by the actions
of the r/WSB is a result of their keen interests in
the potential capacity and not the failures of the
companies. Like an unexpected casino bonus for australian
online slot machines, the r/WSB have decided to
gift such interference to companies that the rest
of Wall Street have left for dead. They make use of
information released by a group of short-sellers who
anticipate companies failure in an attempt to
quickly borrow and at the same time sell stocks to
gain off from this assumption to invest in such companies.
do all they possibly can to buy these stocks, just
to hold them off from the short-sellers, which leads
to a catastrophic financial impact on hedge funds
as well as a group of investors who take on high-risk
strategies by pooling all their money to make gains.
This eventually leads to an increase in demand for
stocks than the available supply of them, hence, the
substantial increase in their prices and value.
the facts and figures above, it is clear that with
the right forum and tools, certain impacts can be
made just like that of the r/WSB Reddit Forum on stock