Retail traders have invested as much money in so-called “meme stocks” in the past two weeks as they did at the peak of GameStop’s frenzy in January, analysts at Vanda Research said Wednesday.
Meme stocks have received $ 1.27 billion in money from small investors in the past fortnight, matching the peak in January, when retailers bought GameStop papers to raise the share price and punish gamblers for their decline, forcing them to fall back. cover your positions with heavy losses.
Meme stocks are company papers that see their value fueled by social media attention.
In the frenzy, several retail brokers restricted the purchase of GameStop after the collateral requirements necessary to liquidate trades skyrocketed, infuriating many operators and prompting congressional hearings and regulatory polls.
The recent spike in stock prices comes as individual traders on internet forums – like Reddit’s WallStreetBets – have boosted stocks at various companies. In recent weeks,: its price shot up 2,000% so far this year and registered an all-time high on June 2. This week, the new investor favorite is Clover Health, a private health insurance company, whose shares rose 14% on Wednesday to a record high.
The amount of cash flowing into meme stocks has been greater than that of any sector or industry, even outpacing the S&P tech sector, according to Vanda, which tracks retail flows.
“It’s going to be consistent and participation is good, but there is still a risk of high speculation and market manipulation within those meme stocks,” Rob Sechan of NewEdge Wealth told Reuters.
What sets these meme stocks apart “is that they are absolutely hated by the hedge fund community, who have been piling up short bets (borrowing stocks to sell at a high price – expecting them to fall – and then buying them at a higher price. low and stick with the spread as profit) for some time, “the Vanda researchers said.
Sectors currently experiencing higher retail participation include stocks linked to cannabis and game developers, while space exploration and electric vehicle companies, as well as cryptocurrencies, have seen a decline in retail interest, Vanda said.
With information from Reuters.
