In January and February we wrote about Reddit users inflating GameStop shares and trying to influence silver prices. And now private investors, uniting in the social network, chose new preys for their actions:. Cleveland-Cliffs, Clover Health, and Wendy’s.
In short — about traders from Reddit
At the beginning of 2021, the users of the r/wallstreetbets community of a popular social network Reddit decided to declare a war on Wall Street. First thing, they massively bought the shares of a chain of videogames shops called GameStop. Before that, the company had 140% of its shares played short.
On January 27th, thanks to those Reddit users, the shares of GameStop (NYSE: GME) reached their all-time high of $347.51, demonstrating growth by 134.84% over a trading session. As a result, Bloomberg claimed that only at the end of January shortists lost $6 billion.
Next thing, private investors took up inflating the shares of other companies in trouble: AMC Entertainment, Nokia, Virgin Galactic, BlackBerry. They even got their hands on silver futures: on February 1st, they cost more than $30 per ounce, which was the new high since 2013, the Financial Times claimed.
New "meme" shares
And now, according to CNBC, the representatives of r/wallstreetbets subreddit, which now includes over 10 million people, turned their eyes to Cleveland-Cliffs, Clover Health, and Wendy’s. Let's see what's going on with the shares of these companies.
Clover Health shares
On June 7th, the stock price of Clover Health (NASDAQ: CLOV), a provider of medical insurance programs, rose by 32.44% to $11.92. On the next day, the quotations kept growing and reached $22.15, growing by 85.82%.
According to S3 Partners, 43.5% of Clover Health shares are traded short. However, the expected short squeeze didn't happen: on June 9th, the stock price dropped by 23.61% to $16.92, and on June 10th — by 15.25% more, to $14.34.
The shares of the Wendy’s (NASDAQ: WEN) fastfood chain started growing on June 8th. That day, they grew by 25.85%, reaching $28.87. However, on the next day, the stock price dropped by 12.68% to $25.21. Yesterday, the trading session closed with a decline by 3.13% more, to $24.42.
The shares of an American metallurgic company Cleveland-Cliffs (NYSE: CLF) Started on June 8th. The quotations then grew by 4.65% to $20.07. They kept growing on the next day — by 14.55% to $23.22, tgeir high since January 2014.
Note that the average daily trading volume of the company's shares is $22.45 million but on June 9th, it reached $89.03. On June 10th, the stock price demonstrated a minor decline by 1.12% to $22.96.
How the SEC reacted
According to the Wall Street Journal, the head of the US SEC Gary Gensler considers the probability of a change in tge market structure. He says, 47% of trades are made by high-speed traders and private trading platforms.
Mister Gensler is sure that to keep trades transparent, the method of calculating the best selling/buying price in the country is to be changed alongside the calculation methods for stock quotations at exchanges and brokers.
Private investors from the Reddit social network found new goals for massive purchases meant for making money and punishing shortists. This time they chose Cleveland-Cliffs, Clover Health, and Wendy’s. At the beginning of the week, these quotations demonstrated noticeable growth but it changed to falling almost immediately.
What else to read about Reddit investors on R Blog?
- Nokia: Shares Are Just Starting to Grow
- What's Going on with Cannabis Companies' Stocks and Why?
- GameStop. Short-Squeeze. Trading System
- Investors from Reddit Are Trying to Influence Price for Silver