Wall Street’s retail frenzy continues

by Jonathan Adams
Wall Street

GameStop advanced 92.7%, Etsy gained 8.6%, and BlackBerry added 4.9%

Individual investors continued to pile into niche stock market plays on Tuesday, causing a scramble by short-seller funds to cover losing bets, with companies like GameStop skyrocketing for the fourth straight day even as others caught up in the buying frenzy reversed gains.

GameStop gained 92.7% at the close of a roller coaster session. Etsy was up as much as 8.6% in GameStop’s slipstream but later reversed its gains, and BlackBerry, which advanced 4.9%, was another early buying focus in this increasingly influential corner of Wall Street.

After the bell, GameStock extended its gains, rising more than 20% in post-market trading.

The surge in recent days – GameStop has increased more than seven-fold to $147.98 from $19 since Jan. 12, while BlackBerry Ltd has shot up 185.4% this year – has spurred concerns over bubbles in stocks that hedge funds and other speculative players had bet will fall in value.

Trading of GameStop stock was halted for volatility nine times on Monday and five times on Tuesday.

To some on Wall Street, the moves have also begun to look symbolic of a stock market that may be overvalued at the end of a year dominated by floods of fiscal and monetary stimulus to ease the coronavirus crisis.

This is hardly an environment where informed investors are transacting to establish price discovery, said Mike O’Rourke, chief market strategist at JonesTrading.

The benchmark S&P 500 has gained more than 70% since March, with analysts putting moves in share prices of several loss-making firms down to herds of amateur investors chasing tips from Reddit discussion threads or the private Facebook group “Robin Hood’s Stock Market Watchlist.”

I don’t think this is a fad, it is a generational shift in how people think about investing their money, John Patrick Lee, ETF manager at VanEck.

A retail trader will not lean on Wall Street to manage their money and I definitely now see an antagonistic relationship between the old guard (Wall Street) and individual traders who are on the rise, he said.



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