'I Just Like the Stock' versus 'Fear and Loathing on Main Street' : The Role of Reddit Sentiment in the GameStop Short Squeeze

31 Pages Posted: 30 Apr 2021

See all articles by Cheng Long

Cheng Long

Trinity Business School, Trinity College Dublin

Brian M. Lucey

Trinity Business School, Trinity College Dublin; University of Sydney Business School; Ho Chi Minh City University of Economics and Finance; Jiangxi University of Finance and Economics

Larisa Yarovaya

University of Southampton - Southampton Business School

Date Written: April 8, 2021

Abstract

This paper investigates the role, if any, played by the social media platform Reddit, in the events around the GameStop short squeeze in early 2021. In particular, we analyse the impact of discussions on the r/WallStreetBets subreddit on the price dynamics of the American online retailer GameStop. We perform textual analysis on 10.8m comments and surface the relationships between the comment sentiments and 1-min GameStop returns. Results indicate that both tone and number of comments influence GME intraday returns. Sentiments extracted from longer threads have a greater influence. Fear is the dominant sentiment in all comments, while comments that express a Sad sentiment show the most significant impact. While investors may just like the stock, it appears that fear and loathing also are important.

Keywords: Gamestop, Reddit, Robinhood, media sentiments, short squeeze, Herding, textual analysis

JEL Classification: D91, G41

Suggested Citation

Long, Cheng and Lucey, Brian M. and Yarovaya, Larisa, 'I Just Like the Stock' versus 'Fear and Loathing on Main Street' : The Role of Reddit Sentiment in the GameStop Short Squeeze (April 8, 2021). Available at SSRN: https://ssrn.com/abstract=3822315 or http://dx.doi.org/10.2139/ssrn.3822315

Cheng Long

Trinity Business School, Trinity College Dublin ( email )

College Green, Dublin 2
Trinity College Dublin, the University of Dublin
Dublin, D02 PN40
Ireland

Brian M. Lucey (Contact Author)

Trinity Business School, Trinity College Dublin ( email )

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Dublin 2
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+353 1 679 9503 (Fax)

University of Sydney Business School ( email )

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Australia

Ho Chi Minh City University of Economics and Finance ( email )

59C Nguyen D├Čnh Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Jiangxi University of Finance and Economics ( email )

South Lushan Road
Nanchang, Jiangxi 330013
China

Larisa Yarovaya

University of Southampton - Southampton Business School ( email )

Highfield
University Road
Southampton, SO17 1BJ
United Kingdom

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