Day traders are acknowledging that they have sparked a revolution on Wall Street, which has taken the shares of GameStop Corp. GME helped juice.
and AMC Entertainment Holdings AMC,
and basing segments of the hedge fund industry in the process.
Now a group of data providers risk that financial markets will never be the same again and that investors with a deep pocket will shell out a lot of money to monitor discussions on message boards like Reddit’s r / wallstreetbets and social media platforms like Discord. listed companies.
“We believe this is a kind of watershed moment and perhaps irreversible,” Boris Spiwak, marketing director of alternative data firm Thinknum, told MarketWatch in an interview on Monday. Thinknum’s plans were mentioned in an article by Barrron over the weekend.
Spiwak said it envisages customers using the services of companies like Thinknum as a way to not only benefit from chats on social media platforms, but also as a form of crisis management. .
“It’s very new and we see it as a crisis management purchase, as an insurance policy, and as a way to increase returns and reduce losses,” he said.
Thinknum’s service, which launched last week, is one of the most expensive customers, costing just under $ 25,000 a year, after the number of times New York listed companies and those on the Nasdaq are named after to track. on sites like r / wallstreetbets or other Reddit subreddits.
“The demand was huge – we’ve received more than 100 incoming hedge fund requests over the past few days,” wrote the Thinknum marketing director.
So far, interest in these expensive products is coming from fund managers, but the company says it is also inquiring from institutional investors looking for an insurance policy to protect themselves from Reddit. ‘
The step of the alternative data venture comes as GameStop and other ventures, such as film chain AMC Entertainment and headphone maker Koss Corp. KOSS,
has seen a parabolic surge in stock values over a short period of time, as investors flocking to sites like Reddit’s r / wallstreetbets have poured millions into short-circuiting companies to boost their shares.
The recent advances in stocks with a major shortfall targeted by the army of individual investors have turned out to be sham funds.
Melvin Capital Management, one of the hedge funds seen in the midst of the kerfuffle over GameStop, lost 53% on its investments in January, The Wall Street Journal wrote, citing celebrities. WSJ also said another hedge fund Maplelane Capital ended January with a loss of about 45%.
Meanwhile, Andrew Left, founder of Citron Research, last Friday, a renowned short seller, changed his strategy and said that his firm will no longer publish reports on short sales. On the left, individual investors were seen to be furious over his negative view of GameStop – a retailer that he said was only worth about $ 20 amid an increasing shift in digital video game sales.
‘Young people want to buy shares. This is the spirit of the times, ”Left said of his decision to identify the company, which he said was overvalued, and to publicly announce that he was betting that his shares would fall.
“They don’t want shares short, so I’m going to help them buy shares,” Left said of his focus on long-term investments.
Other companies, including SimilarWeb, are also trying to promote tools for investors to track investments and discussions on popular social media sites and on some of the popular trading platforms.
SimilarWeb says that it can track down on Robinhood Markets searches for stock marketers among mobile app users and computer users, for example. SimilarWeb says that search activity can be an indication of actual trading and that it can help clients identify trends early on, according to Ed Lavery, director of investor solutions at SimilarWeb.
Similar web
SESAMm, which considers itself one of the leading providers of analytics and artificial intelligence for investment professionals, has also developed or worked on services that can help identify social media trends, Spiwak said.
SESAMm, which recently raised about $ 7.5 million in venture capital financing from NewAlpha Asset Management and global investment firm The Carlyle Group, did not immediately send an email for comment.
Meanwhile, the liquidation of profitable long positions by hedge funds and other investors who needed cash to cover losses due to the loss of short positions, is blamed for the Dow Jones Industrial Average DJIA,
the S&P 500 index SPX,
and the Nasdaq Composite Index COMP,
to record their biggest weekly losses since October last Friday.
The markets tried to recover early Monday from the losses, which were likely to start a turbulent February.