Gamestop (GME): Why is it moving everything else?

Retail traders are the new kids on the block.
Is being short, small and mid-cap stocks too dangerous now?
PLTR, BBBY, LGND and other all show strong gains for 2021

Ivan Brian FXStreet

Gamestop (GME) is the phenomenon of 2021 so far. The move in Gamestop may have far-reaching consequences for the future operation of the stock market. The retail investor can no longer be ignored. Power to the people!

Bulls, Bears and Bees!

We are familiar with bulls and bears and how they battle in the stock market, but we are witnessing the entrance of a new participant, the Bee! The retail bees work in their wallstreetbets hive, looking out for one another against institutional invaders! The retail bees swarm over bears trying to take their honey (tendies!), keeping it all for themselves in the hive. The swarm overpowers, the bees must not be disturbed, the bees will sting all bear shorts!

Gamestop (GME): All shorts are targets now

The Gamestop effect may have changed the way the market operates. Certainly, for some of the smaller, mid-cap stocks being short has become a much more dangerous proposition. Hedge funds have been burned on Gamestop (GME). Melvin Capital had to be bailed out by Citadel. Citroen research was squeezed out of its short.

The broader effect

All stocks with large short interest are targets now. Those meeting the right criteria of large short interest, small to medium cap and easy access to trading are seen as targets. Retail and now institutions are increasingly looking for these stocks and as can be seen from the price moves of a selected few the ripple effect from Gamestop (GME) is clear.

AMC Entertainment Holdings (AMC): Short interest 30%

Blackberry (BB): Short interest 6%

Blackberry shares do not have a huge short interest when compared to stocks such as Gamestop (GME), but BB still has been one of the most talked-about stocks on the wallstreetbets reddit boards. Blackberry shares are up 185% for 2021.

Bed Bath & Beyond (BBBY): Short interest 63%

Another heavily shorted stock and heavily discussed on the wallstreetbets reddit site. BBBY seemed the perfect candidate for a short squeeze but Gamestop took over. However, BBBY has still managed a not too shabby return of over 100% for 2021.

Palantir Technologies (PLTR): Short interest 10%

Not the biggest of short interest we have seen for PLTR, but Palantir has still been heavily discussed on retail sites. PLTR shows a gain of 50% for 2021.

The author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

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Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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