There is a method for madness at WallStreetBets. For every action that fires like GameStop Corp. and AMC Entertainment Holdings Inc., many other names announced on the Reddit website are not released.
A Wall Street Journal analysis of millions of posts on WallStreetBets, the performance of the most mentioned companies each month and interviews with traders show what makes a stock take off.
The stocks with the best chance of success tend to have low prices, usually below $ 25, and are little traded. Low stock prices make it easier for small traders to accumulate stakes and can sometimes mean cheap valuations. Low-traded stock prices can be pushed up or down more easily than stocks traded more often.
Large companies with high share prices and volumes – like the third most mentioned company last year, Apple Inc. – tend not to be influenced by what happens on the message board, according to Hudson Cashdan, co-founder of TopStonks.com , a website that tracks the actions mentioned on Reddit.
Success stories often share common traits with actions selected by professionals. Companies seem to be undervalued by some measures and have short-term catalysts to improve their business or, at least, generate enthusiasm.