There is a method for madness in WallStreetBets. For each stock that is shot as GameStop Corp. and AMC Entertainment Holdings Inc., many other promoted names cannot be released on the Reddit site.
A Wall Street Journal analysis of millions of posts on WallStreetBets, the performance of the most-cited companies each month, and interviews with merchants show what drives stocks up.
Shares with the highest chances of success tend to have low stock prices, typically less than $ 25 per share, and are quoted slightly. Low stock prices allow small business traders to accumulate stakes more easily and can sometimes mean economic valuations. The prices of slightly quoted shares can be raised or lowered more easily than the more frequently quoted shares.
According to Hudson Cashdan, co-founder of TopStonks.com, large companies with high prices and volume — such as the third-most-cited company last year, Apple Inc. — don’t usually get carried away by what happens on the message board. website that tracks the actions mentioned on Reddit.
Success stories often share commonalities with actions selected by professionals. Companies seem to be undervalued by some measures and have short-term catalysts to improve their business or at least generate excitement.