Retail investors could buy a record $3 billion of US stocks the day they get their stimulus money, one research firm says

Traders work on the floor of the New York Stock exchange
  • Retail investors could snap up a record $3 billion in stocks the day they start receiving their COVID-19 relief funds, says Vanda Research.
  • That could happen as soon as Wednesday or Thursday, when most Americans will start seeing $1,400 deposited into their bank accounts,.
  • Owning small-cap stocks could be a good way to position for this week’s event, says Vanda Research.
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Retail investors could buy a record $3 billion of US equities in a single day when they receive their $1,400 stimulus checks from the US government, according to Viraj Patel, global macro strategist at Vanda Research

The firm says this could happen as soon as Wednesday or Thursday of this week. JPMorgan Chase and Wells Fargo have previously said their customers are slated to start getting the $1,400 checks on Wednesday.

Numerous Americans have already said on social media sites they’ve already received the cash approved by Congress and signed off on last week by President Joe Biden. The aim is to help reinvigorate the world’s largest economy after it was thrown into recession last year because of the coronavirus crisis.

A new round of cash coming into equities would take place at a time that the S&P 500 Index and the Dow Jones industrial average have hit all-time highs, spurred in part by investors rotating into cyclical stocks that should benefit from the recovery in the US economy. Many businesses have been reopening their doors as millions of Americans have received vaccinations to ward off COVID-19 infections.

“But besides just guessing past retail favourites (GME, TSLA, AMC, BB, NIO etc.) in the hope that retail traders will plow their stimulus checks into those stocks once again — we’d think owning small-cap indices (namely the Russell 2000) could be a good way to position for this week’s event,” Patel told Insider via email on Monday.

Vanda Research’s data analysis arm VandaTracks tracks retail investing activity in 9,000 individual stocks and ETFs in the US.

GameStop, AMC Entertainment and BlackBerry have become popular among retail investors who are active on Reddit’s WallStreetBets platform and who drove the January rally in those and other so-called meme stocks.

The small-cap Russell 2000 Index has gained about 19% during 2021, with movie theater operator AMC among its best performers. The company this week will begin showing films again in California, starting in the major market of Los Angeles.

Big buying of US equities on Wednesday would be on the same day the Federal Reserve will release its monetary policy statement. The Fed isn’t expected to make any changes on interest rates but investors will listen for indications from Fed Chairman Jerome Powell about when the central bank will begin to raise interest rates in the face of improvement in the economy.

Read more: Morgan Stanley says to buy these 12 stocks before their unique catalysts drive them to deliver market-beating returns

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Instagram’s most popular financial meme account is run by an anonymous Wall Street banker who says these 3 stocks could be the next GameStop

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  • Instagram’s most popular financial meme page is run by a New-York based investment banker in his late 20s.
  • After the Reddit-fueled buying frenzy, he published a newsletter to help people make sense of what was going on. 
  • The founder of “Litquidity” told Insider that DraftKings, Virgin Galactic, and Penn have meme potential.
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Litquidity has a following of about half a million people on Instagram, and it’s the most popular financial meme account on the site.

Run by an anonymous Wall Street banker in his late 20s, the account was launched in 2017 when he found some free time between switching jobs. His circle of friends was made up of people working in investment banks, hedge funds, private equity, and venture capital. So he created the account to share funny instances that they could all relate to. 

“It’s a way we could all share the common stuff we were going through – working very late, going through the same struggles of dealing with tough managing directors who were very demanding, stress of the job, enjoying things like going out in New York City to the bars, and the way we think about things,” Litquidity told Insider in an interview.

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The Litquidity account rapidly gathered an audience among the financial fraternity for its unveiling of the lifestyle of someone working on Wall Street. Some of Litquidity’s own colleagues often unwittingly send him his own memes.

“One or two coworkers maybe know, but it’s more of a suspicion,” he said. “It’s basically just my friends and family that know that I run it, but I try my best to maintain anonymity.” 

He found there’s an appetite for market knowledge and information, since events in the financial world transpire very quickly and are easy to miss. And so, around the time that the Reddit-fueled day-trading craze pushed GameStop’s shares higher last month, Litquidity launched a newsletter called the Exec Sum to help readers decipher the goings-on in the market.

The brand describes itself as “the littest daily newsletter covering all things Wall Street & Silicon Valley with a dose of memes.” Having already lined up sponsors, the newsletter is meant to serve as a stream of revenue that adds to Litquidity’s merchandise and advertising business.

Aside from GameStop, the anonymous banker said these three stocks have “meme potential”:

DraftKings. “I think it’s very tied to the same personality that is active on Wall Street Bets. The same way that there’s degenerate stock traders who make the most outrageous investments, sports betters also have similarities with betting on football games, soccer, basketball – you name it. It’s the same type of person throwing money, and they can hit big or lose big.”

Virgin Galactic. Because the “going to the moon” association for the spaceflight company is a “natural fit.” 

Penn National Gaming. “They are the majority owners of Barstool Sports now. Dave Portnoy being such an electric personality, he’s a meme in itself. It could be treated as a meme through sports-betting.”

Litquidity said his brand is still in the early stages and he wants to continue to make good content, entertain people, and eventually focus on educating so more can understand the financial world.

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BlackBerry and Nokia climb as Reddit favorites make a resurgence

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John Chen, CEO of BlackBerry, gives an interview following the opening of his company’s stock at the New York Stock Exchange (NYSE) in New York, U.S., October 16, 2017.

  • BlackBerry and Nokia gained as much as 7.4% and 7.2%, respectively, on Thursday as Reddit traders returned to their favorite stocks.
  • The day traders who lifted meme stocks in January returned to the market Wednesday afternoon and boosted GameStop shares.
  • The revival of strong retail-investor momentum also lifted AMC, Koss, and Express.
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BlackBerry and Nokia rallied on Thursday as the revival of Reddit-trader momentum lifted a handful of so-called meme stocks.

BlackBerry rose as much as 7.4%, while Nokia gained 7.2% at intraday highs. Both stocks quickly pared gains through the morning, with BlackBerry turning slightly negative soon after the open.

The nostalgic telecom names were among the several stocks to surge throughout January as day traders uniting in forums like r/wallstreetbets piled into highly shorted companies. The rally, best known for sending GameStop shares surging, died down in February as momentum shifted and retail investors rapidly exited their positions.

The final minutes of Wednesday’s trading session signaled the day-trader crowd is ready for round two. GameStop spiked 104% higher into the close as casual investors cheered the ouster of its chief financial officer, Jim Bell, as part of a company overhaul. The bullishness quickly spilled over into other Reddit favorites, including AMC, Koss, Nokia, and BlackBerry.

Posts on Wall Street Bets and other online forums suggest the upswing has some staying power. A post predicting “the Mother of All Short Squeezes” for GameStop stock sat at the top of Reddit’s “Popular” page at 8:30 a.m. ET, exposing the website’s users to the latest phase of the Reddit-trader saga. Hugely popular posts likely contributed to the January meme-stock rally, and a revival of such online activity could fuel similar inflows.

However, the day traders are no longer operating from the shadows. The GameStop surge drew scrutiny from Wall Street, regulators, and lawmakers, sparking new debate over protections for retail investors and their power in the market.

The House Financial Services Committee held a hearing on the phenomenon last week that included testimony from Robinhood CEO Vlad Tenev, Citadel CEO Ken Griffin, and popular retail investor Keith Gill, among others. The Senate Banking Committee is expected to hold its own hearings in the near future.

BlackBerry closed at $11.32 on Wednesday, up about 70% year-to-date.

Nokia closed at $4.04, up 4% year-to-date.

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AMC spikes 420% as day traders ignite shorted stocks like GameStop, BlackBerry, and Bed Bath & Beyond

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  • AMC stock surged as much as 420% on Wednesday.
  • Day traders also sent GameStop shares soaring, along with BlackBerry and Bed Bath & Beyond.
  • Amateur investors are seeking quick profits from heavily shorted stocks.
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AMC shares skyrocketed as much as 420% on Wednesday as day traders piled into heavily shorted stocks for a third consecutive day. The stock rally added up to $7 billion to the cinema chain’s market capitalization.

Frenzied buying also drove GameStop shares up as much as 160%, BlackBerry up 31%, and Bed Bath & Beyond up 46%. The four companies gained a combined $29 billion in market capitalization at their peak stock prices.

Amateur investors have gathered, most notably on the Reddit forum r/wallstreetbets, to pinpoint stocks they can buy en masse with the hope of scoring fast profits. They frequently target stocks that are popular shorts, as driving their stock prices up can pressure short-sellers into buying shares back to cover their positions, which sends prices even higher.

Read more: The CEO of the world’s biggest asset manager warns that companies will ‘suffer’ if they don’t cut carbon emissions. Read excerpts from his letter to CEOs.

Day traders also see the strategy as a way to stick it to Wall Street. They have targeted hedge funds such as Melvin Capital, which had negative positions in 17 US-listed stocks at the last count. Four of those – GameStop, Bed Bath & Beyond, Dillard’s, and Ligand Pharmaceuticals – jumped at least 10% on Wednesday.

The GameStop frenzy is especially divisive. The billionaire investor Chamath Palihapitiya bought bullish options on the video game retailer’s stock Tuesday at the urging of his Twitter followers, while Tesla CEO Elon Musk tweeted the word “GameStonk!!” with a link to the Wall Street Bets subreddit.

Read more: MORGAN STANLEY: Buy these 9 sports-betting stocks ahead of the industry’s expected legalization in 12 states this year and its growth to $10 billion in 2025

In contrast, Michael Burry of “The Big Short” fame sent out a swiftly deleted tweet Tuesday condemning the frenzied buying of GameStop stock as “unnatural, insane, and dangerous.” The investor, who has most likely made a fortune on GameStop, also called for legal and regulatory action against those involved.

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