The 37-year-old Gill was the man behind the meme stock rally in 2021 is back with a bang.
What are meme stocks?
A meme stock is one that gains popularity on social media. People like Gill try to influence large groups of unorganised individual investors into buying the stock.
The stocks that the influencers have picked are usually the ones that aren’t popular on Wall Street. Gamestop was one of them in early 2021 before Gill raised a storm on Reddit, a social media platform, which led to the stock gaining over 21 times in just a few weeks.
Big traders, like hedge funds, who hold short positions on such stocks i.e. they expect the stock to fall, lose money when such unprecedented rallies occur.
Something similar has been underway in the last couple of weeks. Shares of Gamestop, the world’s first meme stock, were trading at $10.91 on April 30. Today, each share of Gamestop costs over $30.
The stock gained over 74% on Monday alone. Hedge funds that had bet against Gamestop have lost $1.24 billion as on May 13, according to a CNBC report citing analytics firm S3 Partners.
Here’s the tweet that caused much of the damage.
After over 12 million views within hours of the post on X (the social media platform formerly called Twitter), according to Bloomberg, Gill posted on X again at 11 a.m. New York time, this time a short video clip stating “Fine, I’ll do it myself.”
“That he is able to generate a crowd says that the crowd is back to feeling FOMO and YOLO in an enormous way,” Peter Atwater, president of Financial Insyghts and an adjunct professor at William & Mary and the University of Delaware, told Bloomberg. “When people dive into things that are of pure speculative value, their confidence is extremely high and this is one of the ways that it manifests.”
Gamestop has lost over of 60% of its value at the peak of the meme stock rally in January 2021.
Small investors must remember that manic buying based on a hysteria that originated on social media doesn’t usually lost. Many latecomers to the meme stock rally in 2021 were left holding the proverbial bag.
