White House press secretary Jen Psaki on Friday said the SEC (Securities and Exchange Commission) is reviewing the current volatility of the GameStop stock after it rose over a thousand per cent since the beginning of the year following a boost from by small investors on discussion threads such as “WallStreetBets” on Reddit for driving the surge.
Experts are divided on whether the bullish bets placed by traders hanging out on Reddit and other social media platforms amount to market manipulation.
Some argue that investors calling on each other to buy and drive up the price of a particular stock is the equivalent of a social-media-driven pump-and-dump scheme. Typically, traders who create the buzz benefit from the rally because they already own the shares, while investors who buy late into the hype are typically left holding the bag when stocks drop.
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