American Airlines shares rose by 50 percent on Thursday after a mention of the airlines was made on WallStreetBets, a subreddit where participants write about the stock exchange that has come recently under the spotlight for short squeezing financially troubled companies.
American Airlines’ executives were prognosticating that the revenues would drop by 60 percent during the present quarter, due to the pandemic repercussions on the business.
Besides GameStop, companies such as Express, Blackberry, and AMC theaters all experienced spikes in the stock value apparently due to organized small investors trying to outsmart Wallstreet stock tactics.
GameStop’s business had been deteriorating since most people buy video games online rather than in brick shops physically.
Melvin Capital Management, a hedge fund worth reportedly over $12 billion, was apparently getting ready for a short position in GameStop—betting more than $55 million on the dropping of GameStop’s stock value, according to investor Shaan Puri.
This is when small investors that allegedly communicated through an email list and Reddit decided to buy GameStop stocks en masse, making the stocks of the struggling gaming company rise up to $300 per share.
The Reddit user that apparently started the short squeeze speculation several months ago by investing some $750,000 has seen the value of his position grow to about $16 million.
Blackberry, a struggling phone company’s stocks have also soared: from less than $7 per share to more than $22.
The investors are telling each other not to sell and if possible to keep buying more of these stocks, even at the high price, and some reportedly intend to take this all the way up to the Federal Reserve, after the companies that lent the stocks/money to Hedge Funds need to borrow more money from bigger banks.
The incident has sparked a large number of internet jokes known as memes, and commentaries. The majority of the commentaries by the non-corporate individuals are celebrating the defeat of the Wall Street veterans.
Many mainstream media commentaries about this event are saying that small investors are manipulating the system and are calling for communication platforms to be shut down.