By Shelly Melancon (Switzerland)
- GameStop stock not among the 10 most-bought stocks by retail investors last month, data reveals.
- The buzz from a group of traders on Reddit resulted in a short squeeze in the stock’s price action.
- JP Morgan reveals that retail traders were not the driver of the extreme price surge experienced by GameStop.
- Institutional investors drove the momentum of GameStop
JP Morgan recently released a report showing the true driving force behind the spike of GameStop stock (NYSE: GME) last week. The upswing took the market by surprise, particularly hedge funds managers that went short on the stock last week. Several individuals and market analysts wondered what could have caused the rally.
The Players Behind The Gamestock Rally Revealed
Last week, many purported that the rally by the stock, which was about 700% swing, was linked to the buzz created by a group of retail traders on Reddit. However, according to the data revealed by JPMorgan, GameStop was not among the top 10 stocks bought by retail traders last month.
Also, it noted two companies that were particularly caught up in the recent market buzz: Plug Power and AMC entertainment; however, the companies’ names were on the list, but GameStop was absent.
Last week’s news was that the surge was caused by a group of retail traders who were up against WallStreet hedge funds. It was assumed that their action resulted in the short squeeze experienced by hedge fund managers forced to forestall complete loss.
Recently, the cat has been let out of the bag, the faces behind the GameStop stock rally has been revealed. The data revealed that Institutional investors were the real players behind the price spike. Art Cashin revealed last week that he knew there was something more behind GameStop’s extreme price action than just the buzz by retail traders.
Retail Investors Turned Out To Be Net Sellers
A qualitative and derivatives strategy analyst, Peng Chen, said that although retail investors were believed to be the ones who drove GameStop’s surge, he said the real cause is quite different.
JPMorgan, a quantitative company that uses public data to determine the volume of trades from retail investors, recently found out that GameStop showed up as number 15 on the list. It then concluded that retail traders could not have driven the market that much.
The newbie investors took over the social media last week, sending screenshots of the stock’s price action. The short squeeze caused many wall street hedge funds to close out their bearish positions to minimize further loss.
The data released by JPMorgan showed that retail investors were net traders. Last week, an article from the wall street journal revealed that Senvest Management, a hedge fund company made $700M from the market surge.
However, there are some news that SEC regulators are scrutinizing the Reddit posts to see if there were traders with bad intentions. They are also trying to see if the extreme action by GameStop was caused by bots. SEC officials are looking into the occurrence to find a possible explanation for the event.
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