Social media Reddit is suddenly in focus for hedge funds and other big investors and not only a chat platform for small investors doing short deals in shares.
Members of Wallstreatbets on Reddit last week managed to multiply the values on shares in GameStop, with hedge funds and investment banks estimated to have lost impressive sums. Trends now indicate that the group is aiming at silver with its value suddenly reaching its highest value since 2013.
The Reddit group initially aimed at undervalued shares like they did concerning game retailer GameStop. The company´s shares were valued very low as gaming has moved online with hedge funds and other big investors blanking – dealing with shares they actually did not have – and speculating in that the falling trend to continue. But Wallstreatbets, comprising small and amateur traders, joined forces and pushed the share dramatically up forcing the big dealers to actually buy the shares they had used for blanking and to a much higher price.
With the value of silver increasing very fast, commentators suspect that the Wallstreatbets is again using its network to talk up the value. However, as often with rumours about shares, nothing is totally clear and on Reddit some warned small investors from selling their GameStop shares to buy silver. However, banks have earlier been accused of doing blanking deals in both silver and gold. One post on Reddit said the silver price increase was actually a “coordinated attack” by unnamed hedge funds that had lost big on GameStop shares.
So, the market is holding its breath to see what will happen and if it is the already legendary Wallstreatbets acting. And as data journalist Felix Richter on markets and consumer data firm Statista commented:
So the saga continues. And while it’s yet unclear how the story will play out in the long term, it is almost certain to serve as a cautionary tale for years to come as it exposed the holes in a financial system usually dominated by big Wall Street firms.