The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
Earlier this year, an unprecedented event took place in the stock market.
Already going through a difficult point in their finances, the American chain of video game stores, GameStop, hit an all-time low when adding the effects of the COVID-19 pandemic to the equation.
People just couldn’t afford the risks of attending the store in person, meaning GameStop’s earnings were remarkably far from desirable. So, as expected, this eventually led to a decline in their stock prices.
However, an online community on Reddit saw this situation as an opportunity to pull off a short squeeze. Either be it for nostalgia towards the long-lived store or just “for the meme”, the community managed to come together and increase GameStop’s stock prices by 1,500% over the course of two weeks. It only lasted up to February’s first days, when it once again decreased more than 80% of its peak value.
GameStop’s second meme-powered resurgence
Even before GameStop’s first financial surge of the year, members of the Reddit board r/WallStreetBets had already noticed that several hedge fund investors had their eyes aimed at the company. Their care and love for the company then acted sort of like an inspiration for them to give GameStop a hand and encourage one another to do the same. In their eyes, GameStop deserved to be protected at all costs, especially given that these hedge fund investors were aiming for the company to file bankruptcy.
And even a month later, they’re still on constant alert.
After noticing another extreme downhill for GameStop’s stock prices during the earliest days of the week, Reddit users once again joined forces to invest in the company for a second time.
Last Thursday, GameStop had a surge of nearly 53%, surpassing the week’s earlier losses. In addition, data from Fidelity shows that its buy-to-sell ratio for that same day was almost 3-to-1.
Reddit gives out some love to AMC as well
Reddit’s users seem to be not just in the open for GameStop but companies struggling with the pandemic as a whole.
Within the same time frame, r/WallStreetBets members saw that people also invested in AMC Theaters stocks.
Like GameStop, AMC Theaters has shown losses over time due to a decline in moviegoers, who are now in an actual need to consume entertainment content at home. Its more recent numbers had even led people to predict a big sink in its value coming soon.
As you might expect, Reddit users got a hold of this information quickly and then acted on it.
By the close of Thursday’s trading hours, AMC went up over 21%. Not only that, but Fidelity even confirmed that it was the day’s fifth most popular stock with buyers as well.
What it meant for the Reddit-based investors
People on Reddit quickly went on sharing their experiences with their respective investments. The trend among them seemed that their buy-first-and-ask-questions-later methodology led to huge losses at first, only to recover from them in a day’s time.
People seemed happy with their actions regardless of their ups and downs, calling it a great way to pass the time entertainment-wise.
Whether this practice can bear fruit, in the long run, does merit a conversation of its own, but, at least when it comes to the short-term, it clearly has shown to be something else than “just a meme” for some involved.