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YOLO trading: Riding with the herd during the GameStop episode

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  • Lyócsa, Štefan
  • Baumöhl, Eduard
  • Výrost, Tomáš

Abstract

We explore the 2020 and early 2021 price variation of four stocks: GameStop, AMC Entertainment Holdings, Blackberry and Nokia. The four stocks were subject to a decentralized short squeeze that exploited the short positions of institutional investors. This investor movement was likely initiated by retail investors concentrated mostly around the subreddit r/WallStreetBets (WSB). We demonstrate that part of the next day’s price variation can be explained by an increase in activity on the WSB subreddit relative to Google searches (terms related to the event). We discuss implications for future research.

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  • Lyócsa, Štefan & Baumöhl, Eduard & Výrost, Tomáš, 2022. "YOLO trading: Riding with the herd during the GameStop episode," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003603
    DOI: 10.1016/j.frl.2021.102359
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    Cited by:

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    More about this item

    Keywords

    GameStop; WallStreetBets; Reddit; Short squeeze; Volatility;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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