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Reddit Writers Boosted Stock Price: “Extremely High Risk”
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A rogue online forum saw the share of the doomed Gamestop store chain rise by more than 8,000 percent.
Then the crowd turned their gaze to Nokia, and the entire Helsinki Stock Exchange shuddered.
The turbulence has tormented some small savers, but others run the risk of losing it all.
– I don’t recommend anyone to get into this, says stock market expert Marcus Hernhag.
It has been called a war between internet rebels and fund managers with billions of wallets. It has been described as Trumpism and its disregard for the “elite” who enter the stock markets. It has been hailed as a democratization of the financial arena and has been condemned as a bubble that runs the risk of ruining ordinary people.
Regardless of the name, events in the US contributed to the Swedish online bank Nordnet being unavailable on several occasions on Wednesday.
– When the Stockholm Stock Exchange was opened, it was not possible to log in for a period. The same thing happened at the inauguration in the United States, says information manager Johan Tidestad.
When today’s trading was summarized, Nordnet customers had completed more than half a million transactions. There is more than ever.
– It depends on several different things. We have a growing interest in saving and investing with the corona pandemic. So we are also in the middle of the first reporting period of the year, and then the activity is always high.
– Of course, the spectacular development at Gamestop also contributes.
Photo: Gunnar Lundmark / TT
Johan Tidestad warns you not to get on the train.
It’s up 8,000 percent
Gamestop is the world’s largest physical video game and computer game retailer. The American company, which was founded in 1994, has experienced a very strange ride on the stock market in recent months. After being fairly stable around $ 4, Gamestop’s share price started to rise in September of last year. At the beginning of the year, the price was just under $ 20.
But in recent days, the rush has lost all proportions. On Tuesday, the stock was around $ 145. The next day, the price rose to $ 466. In a week, participation has risen more than 600 percent. Looking at the entire year, the increase is a staggering 8,000 percent.
– These are not healthy movements. There is nothing in the company to justify these major changes, says Marcus Hernhag, author and equity expert.
Instead, the skyrocketing rise is due to several members of Reddit’s Reddit stock exchange board, WallStreetBets, choosing to wreak havoc on Wall Street capital.
The death of stores and the growth of online shopping have led Gamestop to be a long time favorite of glossers. This means that investors speculate that the price will go down by renting shares, hoping that they will be able to buy them back cheaper in the future.
This has upset the Reddit writers. Back in September 2019, the user “DeepFuckingValue” started urging people to buy Gamestop shares to increase the price. The writer then had purchase options for $ 53,000. On Wednesday, the stock deposit was worth almost $ 48 million, corresponding to more than 400 million crowns.
The rush has forced whites to buy stocks at a higher price than they calculated, further spurring development.
The heavy profiles have also contributed to the race. One of them is Tesla founder Elon Musk, who posted a jubilant tweet the other day.
“The risk is extremely high”
All this happens like this without anything having changed in the company or the market in which it operates. This is illustrated by the fact that Gamestop’s share fell about 30 percent at 7pm on Thursday. At that time, US trading platforms had introduced company-related restrictions.
Johan Tidestad at Nordnet warns small savers to try to jump on the bandwagon.
– The risk is extremely high. My advice is to stay away from these actions, he says.
But there are others who view development in a more positive light. Some debaters have welcomed the fact that ordinary people are joining forces against the financial giants.
– It is well said that this equates a little power, says Marcus Hernhag.
– But I really don’t recommend you get into this. My advice to small savers is to own stocks for the long term. If you do, you let the capital work for you.
Photo: Powers Imagery / TT
Gamestop’s stake increased by 8,000 percent.
Aftonbladet has previously reported that anonymous profiles on social media are dedicated to driving up the price of small Swedish businesses. But on Reddit there is a completely different force, and it has already crossed the Atlantic.
On Thursday, the Finnish telecommunications company Nokia went from -7 to +10 percent on the Helsinki Stock Exchange. This without great news from the company. Instead, the reason is claimed to be Reddit posts. The turmoil at Nokia has affected the entire Finnish stock market.
Bloomberg columnist Alex Webb is grim in his analysis of what this could mean.
“Nokia, Ericsson and Huawei account for most of the critical infrastructure needed for mobile and broadband telephony, as well as networks for factories, hospitals and the police,” he writes.
“So it is a source of real concern when WallStreetBets passes Nokia.”
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