Customers leave a GameStop store in Alhambra, California, on January 27, 2021.
Frederic J. Brown | AFP | Getty Images
Wall Street was shaken last week by amateur brokers injecting money into disadvantaged stocks in an attack on the short positions of large hedge funds.
Traditional video game retailer GameStop and movie theater chain AMC are now up 1.744% and 838% over the year, respectively, after retail investors organized via Reddit thread WallStreetBets piled up stocks in an attempt to boost their prices by squeeze institutional short sellers. Short selling is when investors borrow shares at a certain price, hoping that the market value will fall below that level when paying for the shares.
Hedge funds have already lost a lot of money and have been forced to close some short positions as online activists continue to pursue new targets, despite warnings that the David versus Goliath trend may end in tears for some retail investors. On Thursday, the Redditors were leading an onslaught on shares in Nokia and others.
Now, analysts have told CNBC their strategies for investors to stay safe as the battle between retail investors and institutional money heats up.