Gme Investors: Who's In?

GameStop (GME) stock has become a highly-publicised phenomenon, driven by retail investors coordinating on social media platforms like Reddit and Twitter. The number of people invested in GME is difficult to pinpoint precisely, but estimates suggest that around 9% of Americans, or approximately 1,810,000 people, have purchased GME stock as of April 2022. This number may have decreased since, as some investors have closed their positions or moved their shares to different platforms. The GME stock surge has attracted attention due to its impact on traditional Wall Street hedge funds and its role in the great wealth redistribution movement.

eToro has 1.81 million GME investors

EToro, a social media trader, has 20 million users, and 9.05% of them are invested in GME, according to a post on Reddit. This equates to 1.81 million people investing in GME via the eToro platform.

The post also highlights that eToro has a minimal trade requirement of $50 and allows fractional shares. The user who wrote the post assumes that each trader invested the minimal amount in GME and that they bought at the top of about $350 a share, meaning each investor has 1/7th of a share. This would mean eToro holds at an absolute minimum of 258,000 GME shares. However, the user suggests that a more realistic assumption is that each investor in GME has at least one full share, which would mean eToro holds 1.81 million shares.

The post also notes a decrease of 1.46% in people holding GME on eToro since the previous day, indicating that people are closing their positions. The user suggests that this is likely due to people moving their shares to a different platform, which they have done with some friends.

While the post provides interesting insights into the number of eToro users investing in GME, it is important to note that the data may not be completely accurate or up-to-date, and individual circumstances may vary.

9% of Americans bought GME stock

The GameStop (GME) stock surge made headlines in 2021 as it was driven by retail investors—individuals who buy and sell stocks for their own gains, as opposed to professional investors working on Wall Street. The surge was largely fuelled by the subreddit r/WallStreetBets, a community 2.9 million strong that refers to its members as "degenerates" and idolises Elon Musk. These retail investors banded together to "bleed the short hedge funds dry" and trounce the hedge funds to make everyday retail investors rich.

A Yahoo Finance-Harris Poll survey found that 9% of Americans had bought at least one share of GameStop, while 10% had bought a share of AMC Entertainment (AMC). Other popular stocks of the Reddit frenzy included BlackBerry (BB) at 6%, Nokia (NOK) at 5%, and Castor Maritime (CTRM) at 4%. The median investment was $150, and the average investment was $8,533.

The survey also revealed that the group that put the most money into GME was men between the ages of 18 and 44, at 40%. Only 17% of women in this age range invested in these stocks. In addition, 50% of investments were under $250 in size, while 15% of investors put in $1,000 or more.

A separate SurveyMonkey poll found that only 8% of Americans had bought so-called 'meme stocks' like GME. This poll also revealed that 75% of respondents had not only refrained from purchasing GME or similar stocks but also had no interest in ever participating in community-driven trading events.

The GME stock surge was a result of a "short squeeze", which occurs when investors buy a stock en masse, driving up the price and forcing those who had bet against the stock to cover their short position by buying it as well. While this particular event was highly publicised and dramatic, investment strategist Craig Fehr notes that short squeezes are not unusual and happen all the time.

GME is a meme stock

GME, or GameStop, is widely regarded as the first meme stock. Its share price rose as much as 100 times over several months as its online community crafted a short squeeze. The stock gained viral popularity due to heightened social sentiment, particularly on social media platforms like Reddit, Twitter, and TikTok.

Meme stocks are shares of companies that have gained viral popularity due to heightened social sentiment, usually driven by online activity. These online communities dedicate significant research and resources towards a particular stock. Meme stocks often have heavier discourse and analysis in discussion threads and posts on various platforms.

The GameStop frenzy, kicked off by the subreddit r/wallstreetbets, resonated with retail investors and individuals who resented what they perceived as the Wall Street establishment. The narrative of small-time Reddit investors taking on the big Wall Street guys in a David vs. Goliath battle caught the attention of many.

While the exact number of people invested in GME is challenging to pinpoint, some estimates provide insight into its popularity. A Yahoo Finance-Harris Poll found that 9% of Americans, or approximately 30 million people, bought at least one share of GameStop during the frenzy. Another source indicates that eToro, a social trading platform, has 20 million users, with 9.05% of them investing in GME. This would equate to approximately 1.81 million people investing in GME through eToro alone.

The popularity of GME as a meme stock has had a significant impact on the trading landscape, with a high proportion of retail investors using more complex financial instruments and an increased interest in understanding how the market works.

GME stock surged over 70%

On May 13, 2024, GameStop (GME) stock soared as much as 110% before paring gains, and it was halted for volatility multiple times. The stock rose above $30 per share, closing up 75%. This surge was triggered by a post from "Roaring Kitty," the individual who kick-started the meme stock frenzy during the pandemic, on X, formerly known as Twitter. Roaring Kitty, identified as Keith Gill, had become a prominent figure on the WallStreetBets subreddit and YouTube for his bullish stance on GameStop.

The recent rally in GME stock can be attributed to various factors. Firstly, the return of Roaring Kitty, a prominent figure in the meme stock community, generated significant interest and influenced retail investors to follow suit. Secondly, there was a sense of outrage at the plumbing system that powers stock trading, with terms like settlement periods, market makers, clearinghouses, and collateral being thrust into the spotlight. This likely motivated investors to take a stand against what they perceived as Wall Street establishment practices.

Additionally, the surge in GME stock can also be understood in the context of a broader meme stock resurgence. Fellow meme stock AMC gained up to 50% during the same session, while Trump Media & Technology (DJT) rose by 8%. This indicates a broader trend of increased risk appetite among investors for speculative trading.

It's important to note that the GME stock surge comes after a period of decline. In January 2024, GME experienced its biggest daily decline in over a month, and the stock had been struggling since the early 2021 rally, which was similarly fleeting. The sudden interest in GME stock in 2024 took many by surprise, and it remains to be seen whether this surge will be sustained or if it will follow a similar trajectory to the 2021 rally.

While the exact number of people invested in GME is challenging to pinpoint, some sources provide estimates. A SurveyMonkey poll found that only 8% of Americans had bought so-called 'meme stocks' like GME. In contrast, a Yahoo Finance-Harris Poll survey revealed that 9% of Americans had purchased at least one share of GME, with 28% buying one of the viral stocks during the frenzy. Additionally, according to a Reddit post, eToro, a social media trading platform, had 9.05% of its 20 million users investing in GME, amounting to approximately 1.81 million people.

GME trading is risky

In June 2024, GME shares surged after retail investor favourite Keith Gill, also known as "Roaring Kitty", posted a screenshot on Reddit showing he had built a sizable position in the company. The share price more than doubled in premarket action, finishing up 21%. However, investors are urged to think twice about getting caught up in the frenzy. Wall Street professionals caution that it is a risky move, and big losses are a very real threat.

The potential to lose money is significant, and many investors have lost consistently. GME is considered a "lottery ticket" purchase, where you might profit, but you might also lose everything. This type of speculative trading is more about luck than skill. GME's massive moves are disconnected from fundamentals, and analysts predict the stock is worth single digits.

GME is a risky investment, with a very large prediction interval from the Bollinger Band, and is considered a "very high-risk" stock. The price has fallen in 7 of the last 10 days, and the long-term average holds a general sell signal.

Some trading platforms have prevented people from buying GME shares, citing unusual volumes that have led to an unprecedented market environment. While this may be to protect their clients, it could also be due to lobbying by hedge funds.

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