Reddit Stocks Fall to Earth, Short Squeeze Ends
Reddit or meme stocks have been losing gains that they have generated in the past weeks because the rally was built on emotions and speculations.
The stock price of video gaming retailer GameStop (NYSE: GME), which surged to almost $400 level last week, plunged 75% in the last five days amid traders profit taking strategy as well as lower buying interest from new traders.
Bank of America has presented a bearish outlook for GME stocks, with a $10 price target. The bank claims that daily volume, online conversation, and short interest have turned lower enough in the past few days. Shares of GameStop are currently trading around $50.
BAnk of America analyst Curtis Nagle said:
“We think fundamentals will again factor into valuation and note that at the current price of $92 and GME’s 5yr avg EV/EBITDA of 3.7x, the implied EBITDA is $1.6bn vs. $(65)mn in ’20,”
Other Reddit stocks have also been falling at a strong pace as investors are selling their position to avoid losses. AMC (NYSE: AMC) and Koss Corporation (NASDAQ: KOSS) stock prices fell close to 70% from last week’s high.
Nokia CEO Urge to Reexamine Trading Rules
Nokia stock also saw a massive rally in the last week amid Reddit day trader’s heavy buying strategy. However, shares lost all those gains and currently trades around $4.
Nokia CEO Pekka Lundmark said:
“It has nothing to do with our business. As a CEO, what can I say? The only thing I can do is focus on my business. It is strange. We are only watching on the sidelines.”