LEAWOOD, Kan. — If you follow stocks, you may have noticed a quick rise in the stock prices of several companies, including locally owned AMC Theaters. This is not a move by wall street, but a grass roots effort by amateur investors.
Individual investors, members of Reddit group, The Wall Street Bets, sparked this movement and are proving there is power in numbers.
“In my opinion, I think this is probably the first time something like this has started to happen,” said Bill Keen, the president and CEO of Keen Wealth Management.
Wall Street hedge funds have been betting against some struggling companies and recently there’s been an effort to interrupt that. In just the past few days, its cost the big guys billions.
Instead of letting Wall Street capitalize on fledgeling stocks, like GameStop, an army of individual investors swooped in. GameStop began the year around $18 a share. Now those smaller buyers have sent it soaring to $380.
The groups most recent target for a boost, Leawood based AMC Theaters, which has been struggling through the pandemic.
“The primary reason would be to make money,” Keen said. “The second reason would be to kind of stand up to Wall Street. That the little investor is standing up to wall street and the big money players.”
President of Park University’s Business and Investment Club Sophie Roper bought both GameStop and AMC stock. She said investment apps have been a game changer in what she calls democratization of the market.
“A lot of brokers don’t impact the market that much,” Roper said. “I mean, I know on Tuesday GameStop was traded more than Apple or Tesla, or any of those major fortune 500 companies.”
While this kind of financial activity has run stock prices up, President and CEO of Keen Wealth Advisors, Bill Keen said the rise in stock price alone will not save struggling companies.
“Technically, what we’re seeing is just the daily buys and sells,” Keen said. “So it helps investors, but from the fundamentals of the companies, nothing has changed.”
Keen warned that type of trading activity is highly speculative and people should not put significant long-term investment money into this type of stock play. It’s better to sit on the sidelines and be entertained by it.