If He's Still in, I'm Still in! How Reddit Posts Affect Gamestop Retail Trading
31 Pages Posted: 13 May 2021
Date Written: May 10, 2021
In January 2021, the stock price of NASDAQ-listed GameStop Corporation surged more than thirty-fold following frenzied discussions on a Reddit forum. While Social Media-organized retail trading is not a new phenomenon, the magnitude of the resulting swings in GameStop's share price in combination with a short- and/or gamma squeeze scenario is unprecedented. Using financial data as well as an extensive dataset of Reddit posts, we show that Reddit posts lead to increased retail trading activity in GameStop shares and introduce a new option-based measure for retail trading proportion which could help academics, regulators and investors to track and analyze similar developments in the future.
Keywords: GameStop, Retail Trading, Sentiment Trading, Market Structure
JEL Classification: D91, G14, G41
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