GameStop Mania Reveals Power Shift on Wall Street—and the Pros Are Reeling
Internet-fueled amateurs, on platforms like Reddit and Discord, are piling into stocks, bragging about gains and banding together to intensify moves
By Gunjan Banerji, Juliet Chung and Caitlin McCabe
The power dynamics are shifting on Wall Street. Individual investors are winning big—at least for now—and relishing it.
An eye-popping rally in shares of companies that were once left for dead including GameStop Corp. , AMC Entertainment Holdings Inc. and BlackBerry Ltd. has upended the natural order between hedge-fund investors and those trying their hand at trading from their sofas. While the individuals are rejoicing at newfound riches, the pros are reeling from their losses.
Long-held strategies such as evaluating company fundamentals have gone out the window in favor of momentum. War has broken out between professionals losing billions and the individual investors jeering at them on social media. Meanwhile, the frenzy of activity is stirring regulatory and legal concerns, as well as the attention of the Biden administration. The White House press secretary said on Wednesday that its economic team, including Treasury Secretary Janet Yellen, is monitoring the situation.
The newbie investors are gathering on platforms such as Reddit, Discord, Facebook and Twitter . They are encouraging each other to pile into stocks, bragging about their gains and, at times, intentionally banding together to intensify losses among professional traders, who protest that social-media hordes are conspiring to move stock prices.
“I didn’t realize it was this cultlike,” said short seller Andrew Left of Citron Research, who has become a particular target of some investors on social media. “It’s just a get-rich-quick scheme.”
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Articolo tratto dal “The Wall Street Journal” del 27/01/2021