The “Reddit rally” continued on Wednesday, as officials began to wonder if they were dealing with a populist market insurgency or something more sinister.
Shares of GameStop and AMC Entertainment posted day gains of 134 percent and 301 percent, respectively – just the latest in what has been described in Reddit message boards as a “war” between novice investors against Wall’s elites. Street, which have short stocks to take advantage of potential declines.
“I want to help with this move and I will keep the line!” a user recently wrote about his investment in the video retailer GameStop.
But when asked about the dizzying heights that actions like GameStop can reach, Nasdaq boss Adena Friedman raised the possibility of a wrong game.
Speaking to CNBC, Freidman said regulators need to question whether the “social media activity” behind recent stock increases could be a form of market manipulation known as the pumping and unloading scheme.
TD Ameritrade also reported problems before announcing new restrictions on popular stock transactions such as GameStop and AMC. The retailer’s brokerage stated that it added trading limits “in the interest of risk mitigation for our company and customers.”
White House Press Secretary Jen Psaki also spoke, saying that “Secretary Yellen and others are monitoring the situation,” while Federal Reserve Chairman Jerome Powell found himself avoiding a question about GameStop during his news conference. after the meeting of the Federal Open Market Committee.
GameStop shares have risen more than 700 percent in recent weeks, sending its market capitalization from about $ 1 billion to $ 24 billion on Wednesday.
The rally was fueled by anonymous posters throwing populist anger at the Wall Street car, which tried and failed to bet against GameStop and other stocks.
Despite concerns, Wall Street professionals seem to believe they have simply been beaten to death. This includes Andrew Left of Citron Research, whose January 21 video predicting that GameStop shares will fall to $ 20 per share has only caused Reddit impressions to double, resulting in a zealous squeeze of the stock.
“It’s not a pump and a discharge, if it’s just a lot of people buying and buying,” Left told The Post on Wednesday. “These are flash mobs that do not respect the market and have turned trading into the smallest form of gambling.”
The left, which reported threats against him and his family to the FBI, said it had abandoned its failed effort to reduce the stock. Hedge fund Melvin Capital closed its short position in GameStop after suffering a huge loss.
Other hedges say they agree with the Left. “More power for the WallStreetBets crowd,” sighed Thomas Thornton of Hedge Fund Telemetry. “They figured out how to play the system, how to beat the shorts and they won. Congratulations to them. ”
“It’s not fraud, it’s not market manipulation, it’s not illegal,” said Francis Curran, a securities litigation lawyer at Kudman Trachten Aloe & Posner. “This is not a boiler to call people cold. It’s a spontaneous online revolution, and the other side of these jobs seems very unhappy about it. ”