Reddit’s army of retail traders may not have been just the driving force behind GameStop’s unprecedented rally that turned Wall Street upside down, new data show.
GameStop was “notably absent” from the list of 10 stocks that retail investors bought the most in January, despite the video game retailer being at the forefront of an alleged market revolution, according to analysts at JP Morgan.
“Although retail buying was portrayed as the main driver of the extreme price hikes experienced by some stocks, the real picture can be much more nuanced,” wrote Peng Cheng, head of machine learning strategies at the megabank, in a note research this week.
In fact, data from Citadel Securities – which runs stock trading for investment startup Robinhood – shows that retail traders in general sold more GameStop shares than they bought from Tuesday through Thursday last week, CNBC reported.
This leaves open the possibility that institutional investors may have played a bigger role in the GameStop explosion than one might have imagined by reading the rambling posts on Reddit’s WallStreetBets forum.
For example, the hedge fund Senvest Management made a profit of almost $ 700 million from GameStop, which started accumulating in September and left after Tesla CEO Elon Musk tweeted about the shares on January 26, according to The Wall Street Journal.
The cinema chain AMC Entertainment – another darling of the WallStreetBets audience – was in fact one of the ten most purchased shares in the retail market in January, according to JP Morgan, which uses public data and a proprietary methodology to track trading activity in retail.
But other companies that were dragged into the fray, such as American Airlines and fashion retailer Express, ended up among the stocks that small investors sold the most, the bank found.
“Retail activities were very high in January and, at the end of the month, won some of the largest market shares in terms of history in terms of shares traded,” wrote Cheng.
However, he added, “Reddit users are probably not the only factor driving price volatility, and their behavior is not representative of the overall retail investor base.”