The last blow of the “war on Wall Street”? The viral attention from the online Reddit community that sent GameStop into the stratosphere saw the shares of a struggling US retail chain go on a rollercoaster ride this week – netting $110 million for a college student. 20 years.
It’s a frenzy that conjures up memories of last year the meme stock saga that saw amateur online investors lose billions of dollars to hedge fund giants.
Meme stocks – stocks that grab the attention of amateur investors via social media – shot to fame during the GameStop saga in early 2021.
Although the company is struggling in the post-pandemic landscape, shares of Bed Bath & Beyond have jumped more than 250% in the past month before falling this week.
Attention was drawn to the Reddit WallStreetBets forum, with one commenter dubbing it “bloodbath and beyond”.
As shares of Bed Bath & Beyond (BBBY) continued to rise in recent days, many voices on Reddit and other social media sites urged other investors to keep buying.
Along the way, some reveled in taking on the professional investors who had bet Bed Bath & Beyond shares would fall.
20-year-old college student wins $110m before stock price plummets days later
Jake Freeman, a student of applied mathematics and economics at the University of Southern California, told the Financial Times how he bought nearly five million shares of Bed Bath & Beyond (BBBY).
Shares of the company had recently fallen due to poor performance and the ousting of its chief executive.
Mr Freeman bought his stake at less than $5.50 (£4.65) per share. By Tuesday this week, the stock had soared to over $27 (£22.81) per share amid huge online attention.
As the shares soared, he sold more than $130m (£109.8m) worth of shares, making a profit of around $110m (£92.8m).
Shares of Bed Bath & Beyond fell more than 20% on Thursday after famous meme stock investor Ryan Cohen revealed he intended to sell his entire nearly 12% stake in the company. .
Frenzy evokes memories of the GameStop drama that cost Wall Street billions
The shock of fans and traditional investors on Wall Street was a key feature of the GameStop drama last year – with many Reddit investors citing the fallout from the 2008 financial crash as motivation to challenge the status quo.
The mad rush started in January 2021 when youhe struggling video game retailer has seen an unprecedented rise in its share price.
Both amateur and retail investors, communicating through social media, particularly on Reddit’s WallStreetBets community, have sparked renewed interest in the company.
They believed the market was undervaluing the “bricks and mortar” computer game store and rallied behind it, forcing the stock price higher with their purchases.
Shares of the company soared more than 500% at one point, creating huge profits for some amateur investors who sold and devastating losses for professional hedge funds who had sold the stock short and remained exposed. .