Wall Street Meets GameStop At Reddit

Shares of GameStop (GME) soared again yesterday, hitting $490 premarket Thursday. (Shares sold for $40 last week.)

I will not offer any financial advice. I never do. But for those who are curious about the unusual increase in share prices, consider this.

Information asymmetry is the fundamental principle underlying every transaction. Depending on their respective investment strategies, both buyer and seller believe that they have more information than the other, and that they will enjoy a positive return on their investment. If you’re thinking about buying, what do you know that the sellers don’t?

This story gets more interesting because GameStop has been a hot topic in the WallStreetBets subreddit. The results of this informational pressure on GameStop share prices is well documented and worth a look.

BTW, this extreme speculative behavior is not limited to GameStop. AMC was up 300% on Wednesday and Bed Bath & Beyond was up 75% this week, though both were down a bit premarket Thursday. Is this behavior an anomaly or a trend? As always, I welcome your thoughts.