Speculations are linked to WallStreetBets’ latest interest.
Following the dramatic rise of GameStop fueled by Reddit users on WallStreetBets, analysts are closely monitoring the activities on the subreddit known for investment discussions. The forum is not only sharing investment tips but also targeting companies that are often shorted by hedge funds. Similar to GameStop, WallStreetBets users are heavily investing in these companies to put pressure on the hedge funds that short them.
The latest firm to experience a significant spike is Rocket Companies, an online mortgage provider, witnessing a staggering 70% increase in its stock value on Tuesday. Rocket has been a popular choice for hedge fund shorting, attracting the attention and collective investment power of WallStreetBets. As a result of the Redditors’ investments, short sellers of Rocket have already incurred an estimated loss of $813 million, as reported by Reuters.
“We believe the trading reflects retail/Reddit activity like we’ve seen in other stocks recently,” stated Wells Fargo analyst Donald Fandetti on Tuesday. “We noted our incrementally more positive view, but not good enough to support this move which is the third trading day after earnings. We expect the shares to normalize and again trade on fundamentals, however the timing is uncertain.”
Short-sellers lost $813 million on Rocket Companies on Tuesday: Ortex https://t.co/Hh6EhnGJDG pic.twitter.com/JPzwSWkLVB
— Reuters (@Reuters) March 3, 2021
“Our beta-tested social media stuff right now picked up on yesterday some really just hugely bullish comments over on the Reddit board WallStreetBets again. These men and women are back and they’re into this one in a big way,” shared Market Rebellion co-founder Jon Najarian.
Analysts predict that the investment surge in Rocket may not reach the same level of intensity as the GameStop surge and may not be as prolonged. Nonetheless, Rocket employees have certainly welcomed the boost, with their shares closing at the highest value since their initial public offering in August last year on Tuesday.
