r/Wallstreetbets is a community of stock and options traders on Reddit who discuss trading shares and options.
A book written about this sub reddit says: “WallStreetBets is a forum based gathering where people are notoriously known for taking a brazen and public approach at gambling with the stock market.” Which is largely pretty accurate. It is a highly speculative group where a lot of ‘insider trading’ takes place. A community of redditers will all buy a certain share which artificially pumps up the price of a stock far beyond it’s actual value.
This community is made up of internet retail traders and they ignore investment practices and risk management. They are seen more as gamblers rather than traders in the eyes of most institutional investors.
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Why have r/Wallstreetbets been in the news recently with Gameshop (GME)?
This collective buying and causing an artificially high price has happened with Gamestop (GME) over the past couple of weeks which has attracted a large amount of media coverage all over the internet.
Gamestop is a gaming store that is not expected to turn a profit until 2023. Even though this company is not expected to be profitable for another 2 years this has not stopped its share price increasing from $17.25 at its lowest price on 04/01/2020 all the way to its peak of $144.63 on 25/01/2020. Traders or gamblers, who would have invested £1,000 in this period could have made £7,384 in this trade had they bought and sold at those prices. So it is no surprise that this speculative trading has raised a large amount of media attention.
The graph below is the share price of Gamestop (GME) to date.
New stocks that r/wallstreetbets are now speculating on
Both Blackberry and Palantir are now the next shares that the WSB’s community are speculating on buying. These shares have low valuations which will allow for large growth.
Blackberry (BB)
The largest phone before the introduction of the iPhone is now the latest target for the Wall Streets Better’s Reddit community. It’s low valuation along with a new contract with Baidu that will see Balckberry’s QNX real-time operating software integrated in a new range of Guangzhou new electric automobiles has caught the attention of WSBs community.
In 2021, there has already been a 150% increase in Blackberry’s share price. If this share grows the same as Gameshop then it may also rise artificially high.
Palantir (PLTR)
Palantir’s low valuation has also caught the attention of the WSBs. In 2021 it’s share price has risen around 50% from $24 around it’s lowest price and up to $36 at it’s highest price. Again, if this follows the suit of Gamestop there is could be a large profit to be made. However, this is a highly risky investment.
Are these shares a safe investment?
We are not financial advisers but we think absolutely not. You can think of it more like gambling but there can be a huge reward. If you are planning on investing in speculative stocks like these then you should really do your own due diligence and only invest what you can afford as while there is a potential to earn a lot of money there is also a very high risk that you can lose most of your investment.
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