That’s roughly the same as GameStop’s elevated 88% figure in January 2021. Both firms would go on to experience short squeezes in their stock, an essential ingredient to getting retail investors excited. To their credit, social media investors have identified striking parallels between Troika Media and GameStop. And management at the two companies have engaged in startlingly similar financial restructuring plans.

In January 2021, a short squeeze of the stock of the American video game retailer GameStop and other securities took place, causing major financial consequences for certain hedge funds and large losses for short sellers. Approximately 140 percent of GameStop’s public float had been sold short, and the rush to buy shares to cover those positions as the price rose caused it to rise even further. The short squeeze was initially and primarily triggered by users of the subreddit r/wallstreetbets, an Internet forum on the social news website Reddit, although a number of hedge funds also participated.

1. Furthermore, short trading may facilitate holistic price discovery, thus potentially mitigating wild peaks and valleys.
2. However, for a glorious year in 2021, the burgeoning concept of Reddit stocks proved that, sometimes, the market can defy gravity.
3. They rose to the public eye because of social media platforms like Reddit and Wall Street Bets.
4. As I mentioned in my coverage for Benzinga, lotteries tend to keep underprivileged communities in a cycle of poverty.
5. “They seem hell-bent on taking on Wall Street, they seem to hate hedge funds and threads are peppered with insults about ‘boomer’ money.

A gaming hardware and peripherals specialist, CRSR stock experienced a massive bump higher in the early months following its debut on the Nasdaq in September 2020. “I’m actually hosting a meeting later this morning with top regulators at the SEC and the Commodity Futures Trading Commission, and also the Federal Reserve to discuss recent developments,” Yellen told ABC News’ Robin Roberts. “We really need to make sure that our financial markets are functioning properly, efficiently, and that investors are protected.” “It was not because we wanted to stop people from buying these stocks,” Robinhood wrote in a company blogpost.

Jan. 27, 2021: Major short sellers close — at a significant loss

$GME is currently priced in the $0.004 range with a market capitalization of just below $30 million. Today, GME stock is down by over 80% compared to its peak in 2021. However, a new meme coin seeks to relive the historic 2021 meme stock craze. It’s called the GameStop (GME-USD) token and bears no actual affiliation with the company, with the symbol $GME and is minted https://bigbostrade.com/ on Solana (SOL-USD). The videogame retailer and original meme stock exited the third quarter with cash and cash equivalents of $1.210 billion, compared with $1.195 billion at the end of the prior quarter. Still, he expressed worry about what comes next — and how GameStop falling will ultimately impact these individual investors and faith in the stock market at large.

Short selling and short squeezes

If an investor catches the right side of a short squeeze you can make a vast profit. Many of these stocks have poor investment fundamentals and you do not want to be around when the light bulb goes off and investors realize the stock is not going to perform well in the long run. If you hold too long, you will likely lose because the short squeeze ends, and then the stock price falls; you could lose all of your gains.

When it comes to playing around with high short interest stocks, unless you are uncommonly lucky, let’s just say the risks greatly outweigh the rewards. Biotechs figure prominently on the list, and certainly some of last year’s meme stock favorites continue to hang on. Just be forewarned that this list is for informational purposes only. If you want to day trade, Insider Financial is not the place for you. When it comes to day trading, and if that’s what you are after, we recommend the folks at True Trading Group, which you can check out their live streams here.

Meta CEO Mark Zuckerberg apologizes to families of children harmed online

And TRKA stock shares have been non-compliant with Nasdaq listing requirements for far less time than beaten-down BBIG stock. My initial assessment of Troika assumed that the firm would act in good faith to keep investors updated about its outsized Series E deal. A Schedule 13D or 8-K filing should have notified shareholders of any significant exercise, since the dilutive effect would be 1) a material event, 2) a 5% or more change in ownership, or 3) both. Instead, it took until March 7 for the firm to retroactively announce in its annual report that its share count had risen over five-fold.

GameStop’s meme status has likely bought the company some time for a potential turnaround, but it hasn’t been a silver bullet. As the tug-of-war between the everyday investors and hedge funds heated up and support grew for GameStop on r/wallstreetbets, the stock skyrocketed more than 50% in the trading session on Jan. 22. During after hours and pre-market trading that weekend, the GameStop continued to climb. As GameStop’s stock goes up, so does the movie’s temperature. GameStop investors are in awe when their holdings go up (on paper), but Roaring Kitty’s followers proclaim to be “diamond hands,” meaning they don’t sell. At some point, Robinhood limits trading on GameStop, a move that many to this day see as questionable.

Wall Street types are pretty meh on the whole episode — one hedge funder I recently talked to told me the idea that the big guys are afraid when retail is in a stock is silly. Some GameStop traders may have won a temporary battle, but institutional investors are still winning the war. Even the stories of some of the traders Dumb Money was based on, and who I talked to for this story, are far from cut and dried. The ad tech firm currently trades for a roughly $100 million market capitalization, valuing its shares at about 0.3X price-to-sales (P/S). That’s the same as GameStop’s valuation immediately before its short squeeze and about eight times lower than the average U.S. firm.

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“The speculative frenzy, and just betting on stocks with nothing more than the hope that they’re going to keep going up, has faded away.” Going long on a stock with high short interest thinking you’re going to get rich off panic-buying by short sellers is an investing in streaming tv exceedingly dangerous idea. It’s at least as risky as shorting stocks with high short interest in the first place. When a trader buys options, market makers that sell the options will go into the market and hedge their exposure with the underlying shares.

Hedge funds are required to disclose their holdings to the SEC at the end of each quarter. This allows investors to see not only what stocks a hedge fund owns, but also which stocks they are betting against. In the case of GameStop, there was no shortage of hedge funds betting against GameStop. The Quant Ratings and Factor Grades provide a springboard for further investigation.

Millions rely on Vox’s clear, high-quality journalism to understand the forces shaping today’s world. Support our mission and help keep Vox free for all by making a financial contribution to Vox today. On the date of publication, Josh Enomoto held a LONG position in GME.