Reddit’s army of retailers may not have been the only force behind the unprecedented GameStop rally that turned Wall Street upside down, new data shows.
According to JP Morgan analysts, GameStop was’ particularly ‘absent’ from the list of ten stocks that retail investors bought the most in January, despite the fact that the video game trader was at the forefront of a perceived market revolution.
“While retail purchases are portrayed as the main driver of the extreme price increases that some stocks are experiencing, the real picture may be much more nuanced,” Peng Cheng, head of the megabank’s machine learning strategy, wrote in a research note this week.
In fact, data from Citadel Securities – which trades shares for investment firm Robinhood – show that retailers generally sold more shares of GameStop than they bought from Tuesday to Thursday last week, CNBC reported.
This leaves open the possibility that institutional investors played a bigger role in the explosion of GameStop than we could have guessed by reading the dirty-mouthed messages on Reddit’s WallStreetBets forum.
For example, hedge fund Senvest Management made a profit of nearly $ 700 million from the GameStop share it started building in September and issued after Tesla CEO Elon Musk tweeted about the stock on January 26, according to The Wall Street Journal.
The cinema chain AMC Entertainment – another darling of the WallStreetBets crowd – was indeed one of the ten most-bought stocks in the retail market in January, according to JP Morgan, which uses public data and its own method to track retail activity.
But other struggling companies, such as American Airlines and fashion retailer Express, ended up among the stocks that sold smaller investors the most, the bank found.
“Retail activity was very high in January and reached some of the highest market shares in terms of traded shares by the end of the month,” Cheng wrote.
However, he added: “Reddit users are probably not the only driver of price volatility, and their behavior is not representative of the overall retail investor base.”