A data firm monitoring Reddit says GameStop mentioned spikes days ago
According to Justin Zhen, co-founder of Thinknum, a tech company that compiles alternative datasets for investors, mentions of GameStop increased on Reddit days ahead of the video game company’s stock launch again.
“In the last 24 hours, we’ve seen the number of mentions for GameStop spikes. It actually started generating spikes about four days ago,” Zhen said in an interview on CNBC’s The Exchange on Thursday.
“Today’s volume was insane, but we’re seeing a big surge ahead of the stock’s run-up yesterday,” he said.
Zhen was referring to the biggest late-day gain in GameStop stocks on Wednesday, which ultimately closed more than 100% higher. The stock continued to rebound during Thursday’s volatile session and stopped several times. It closed at $ 108.73 per share on Thursday, up 18.6%. It had hit as much as $ 184.68 during the day.
The sudden spike followed Tuesday’s news that the company’s CFO Jim Bell was planning to step down in late March. Media reports suggested the departure may be related to board member Ryan Cohen’s desire for GameStop to accelerate its digital transformation.
The big two-day move in the stock puzzled some on Wall Street, and CNBC’s Jim Cramer claimed earlier Thursday that a CFO restructuring is unlikely to be a catalyst for such a significant rally. Whatever the reason, GameStop’s revival is reminiscent of the Reddit-sparked trading frenzy that first engulfed the stock in January when it soared to $ 483 per share.
“What happened to GameStop at $ 480 was one of the most stupid and nonsensical things I’ve seen in a while. This is the second stupidest,” said Anthony Chukumba, an analyst at Loop Capital Markets, at the Power Lunch on Thursday “from CNBC. “” He recently stopped reporting on GameStop, citing the break from the basics.
“I’m excited now, just as I was a few weeks ago,” added Chukumba.
GameStop’s surge in late January put financial pressure on hedge funds and other investors who were shorting the stock. This is essentially a bet that the price will go down.
According to Gabe Plotkin, founder of Melvin Capital, the saga served in some ways as a wake-up call for the hedge fund industry. Plotkin’s Fund was caught on the wrong end of GameStop trading in January.
Going forward, Plotkin told Congress earlier this month he expected the funds, including his own, to monitor social media sites more closely after the power of forums like Reddit’s WallStreetBets was demonstrated.
“I think they saw an opportunity to raise the price of a stock and today there is an opportunity to do that together with social media and other memes,” he said. “That was a risk factor that we hadn’t seen until recently.”
According to LinkedIn, Zhen co-founded Thinknum in 2014, but the company’s Reddit-specific record was released in late January when the GameStop frenzy played out.
According to a blog post on the Thinknum website, the dataset tracks “the number of times that NYSE and NASDAQ tickers appear in real time in the top 100 posts on r / WallStreetBets and r / Stocks.”
In Thursday’s CNBC interview, Zhen insisted that Thinknum is not claiming that its online records are predictions of stocks that are about to rally.
What happened to GameStop when it hit $ 480 was one of the stupid, nonsensical things I’ve seen in a while. This is the second dumbest.
Analyst, Loop Capital Markets
“We provide a service that allows investors to track when the number of Reddit mentions for a particular stock is increasing. We don’t interpret or analyze the data. We don’t claim the stock will go up,” said Zhen, who uses it has to work for a hedge fund.
“But we say there is a lot of talk about the stock today … and if you are an investor you have to be careful,” he said.
In addition to the recently introduced Reddit offering, Thinknum has about 30 other data records, such as: B. those that focus on product prices and where companies open business. “Reddit has been an oversized sample lately, but there are plenty of other data paths good investors look out for,” Zhen said.
The Securities and Exchange Commission announced in January that it was reviewing the GameStop saga. When asked by CNBC’s Andrew Ross Sorkin whether Thinknum was contacted by the SEC, Zhen said, “We have received many inquiries from government agencies that I cannot specifically comment.”
Thinknum has also seen increased interest from investors and companies, Zhen said. “There was great interest. It’s the best thing I’ve seen in six years.”