Following a pandemic-whipsawed 2020, the most prominent development of the current year has been retail investors asserting their presence on Wall Street.
For nearly three months, retail investors on Reddit’s WallStreetBets chat room have been banding together to buy shares and out-of-the-money call options in companies with high levels of short interest. The goal for these predominantly young and/or novice investors is to create a short squeeze — i.e., an event where pessimists who want to see the share price of a stock decline are driven out of their positions by rapidly rising share prices.
Retail investors have been successful in effecting a short squeeze in a handful of securities. Although video game and accessories retailer GameStop might be the most famous, it’s movie theater chain AMC Entertainment (NYSE: AMC) that’s sort of become the battleground stock between Reddit traders and Wall Street.