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At the same time, analysts and institutions are warning retail investors about the risks posed by trading highly volatile stocks.
The Reddit r / WallStreetBets forum launches a battle with institutional investors who have made short bets against GameStop and other companies with less time (AMC, BlackBerry or Nokia) around the world.
Shares bought in droves by Reddit users and other retail investors have been dubbed “meme stocks,” and the most active participants in the debate have vowed to keep them in principle until the end.
Shares of the fighting symbol GameStop, the symbol for GME on the stock market, have been extremely volatile for the past two weeks, peaking at nearly $ 470, but closing at around $ 92.5 on Wednesday.
Impressive “memo trading” didn’t escape Lithuania either: the country’s major banks claim to have seen a sharp rise in equity trading.
“Investor interest in GameStop shares was particularly strong in the second half of January. It peaked late last week, Thursday and Friday, when clients actively and simultaneously sold their GameStop shares. ”Said Greta Šiaučiulytė, Broker at Swedbank’s Financial Markets Service.
SEB analysts also said they saw a sharp rise in interest in the shares.
“Currently, trading is particularly active not only in the shares of the video game vendor GameStop, but also in the shares of the companies AMC, Blackberry and Nokia mentioned in the same Reddit forum”, Eduardas Petrulis, Chief Financial Analyst of the Division Market Research Department of SEB. he told BNS.
Representatives for the popular banking services app Revolut, which enables stock trading on the U.S. stock exchange, said they would not officially comment on BNS, and representatives for Luminor said they had not noticed a significant increase in stock trading in recent days. .
Calls for exceptionally wavy promotions to be avoided
However, the Bank of Lithuania urges small investors with little experience in the markets to avoid trading such volatile stocks.
“Trading stocks is a risky activity as stock prices can fluctuate widely. If stocks are traded with borrowed funds, the risk increases even more, even after selling all the stocks, the investor can remain in debt,” he said. Vaidas Cibas, Head of the Capital Market Supervision Division of the Bank of Lithuania.
“Only those who have a good understanding of financial markets and emerging risks, and have been actively trading in them for many years, should engage in exceptionally fluctuating stocks,” he stressed.
Financial analyst Marius Dubnikov also warns of the risks involved in trading highly volatile stocks.
“The main risk is that if there are potentially high profits, there may be falls. Worse still, when a small investor is fascinated by a weighted investment, in other words, the use of borrowed money, “Dubnikov told BNS.
“GameStop”
© Zuma Press / Scanpix
The analyst says he has received multiple calls over the past week asking whether they should dive into trading GameStop and similar highly volatile stocks.
He argued that such situations could distort the attitude of some small investors in Lithuania, where there are not many people constantly investing, to invest.
“I think the occurrence of these situations is really very detrimental to the investment environment. It means that some people are clearly good at being attracted to investing, but the bad part is that a person does not weigh tolerance for risk and in this case he goes to a game where the risk is very high, “Dubnikov said.
“A person attracted to such an idea is disappointed and then does not return, which means that he is involved in the lower curve, where wealth inequality is not in his favor,” he added.
The analyst emphasized that people must understand that investing is something “quite boring”, whose objective is not to get rich overnight, but to make money in the long term.
He stressed that entering the market at such times is “not healthy.”
“It’s a bit intimidating because a lot of people can get hurt and it’s not a healthy way to go to market. It should be understood that investing is not a process during which we will become very rich the next day, “said M. Dubnikov.
“Short-term transformations: there are no miracles, money doesn’t grow on trees and nobody picks them up. And if sometimes you manage to catch a fruit that hangs low, here it is only a success, but that is not the essence of the investment “, considered the analyst.
There are still calls to hold shares
Behind the Atlantic r / WallStreetBets, the struggle of small investors with large venture capital funds has received much support – joined by Elonas Muskas, founder and CEO of Tesla and SpaceX, who has repeatedly resented investors against Tesla or NBA Dallas. Mavericks club owner Mark Cuban.
The latter urged the r / WallStreetBets community on Tuesday to hold shares in GameStop as long as they had the financial means to do so, despite the company’s shares having fallen more than a few times from the record high.
The decision by some active trading platforms to severely restrict the trading of “memorable stocks” in the United States has infuriated both prominent Republicans and Democrats.
At the time, the r / WallStreetBets forum was telling stories about incredible fluctuations in the value of stocks.
“GameStop” go “Reddit”
Many retail investors have been quick to buy and increase the value of ‘memo stocks’, often lest they venture into venture capital funds that build against companies and profit from falling stocks, which these investors say , They do not do it. create any added value for society.
A member of r / WallStreetBets, later identified as Keith Gill, 34, announced in September 2019 that he had invested around $ 53,000. USD to GameStop shares. In his Reddit and YouTube posts, he argued that GameStop’s stock was undervalued.
GameStop shares attracted more attention from r / WallStreetBets members after a while as they began to climb slowly, with stock and trading prices only peaking in the second half of January, when they started. to be purchased en masse by retail investors.
Shares of K. Gillo, who posts his progress on Reddite daily, peaked at more than $ 50 million last week. Dollars, but he still refused to sell them, losing tens of millions of dollars in recent days.
Despite a sharp drop in the stock last week, some r / WallStreetBets members say they will not sell the stock until Gill sells it.
“If he still has time, so do I (if he’s still in, I’m still in,” write members of r / WallStreetBets.
It is not allowed to publish, quote or reproduce the information of the BNS news agency in the media and on websites without the written consent of the UAB “BNS”.
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