A BATTLE between amateur traders and hedge funds has rattled the stock markets in the United States, Europe and Asia.

WallStreetBets, a Reddit group with more than four million members, have been driving up share prices by betting against Wall Street short-sellers.

Who are WallStreetBets?

WallStreetBets is a Reddit group with several million members who share trading tips about how to beat "the system".

The Wall Street trolls are pushing up share prices by betting against Wall Street short-sellers.

Short-sellers, despised by many, are big hedge funds that bet on a decline by selling borrowed shares in the hope of repaying at a lower price.

The influx in purchases has been putting pressure on short sellers to make purchases to avoid steeper losses.

The battle between the amateur traders and hedge funds has shaken markets in the United States, Europe and Asia.

Some analysts have described the situation as a "nerds vs. Wall Street" battle.

WallStreetBets briefly closed its doors on Wednesday as membership soared past four million.

"We have grown to the kind of size we only dreamed of in the time it takes to get a bad night's sleep," read a message from the group's moderators after it reopened.

"We've got so many comments and submissions that we can't possibly even read them all, let alone act on them."

Tesla founder Elon Musk appeared to support the movement by tweeting a link to the Reddit forum and writing: "Gamestonk!!"

Reddit said it had not been contacted by authorities over the surges.

WallStreetBet's followers have caused such a massive disruption to the stock market that they have attracted the attention of authorities, and even the White House.

"Our economic team, including (Treasury) Secretary (Janet) Yellen and others are monitoring the situation," White House Spokeswoman Jen Psaki said on Wednesday.

"It's a good reminder, though, that the stock market isn't the only measure of the health of our economy," she added.

The Securities and Exchange Commission also confirmed on Wednesday that it was monitoring the activity.

Senator Elizabeth Warren called for scrutiny.

"For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price," she said in a statement.

"It's long past time for the SEC and other financial regulators to wake up and do their jobs."

Congresswoman Alexandira Ocasio-Cortez said: "Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino."

Who is Roaring Kitty?

WallStreetBets is apparently led by YouTube finance expert "Roaring Kitty".

"Roaring Kitty" – whose real name has not been revealed – offers tips on how to hunt stocks and pounce on investment opportunities.

According to Celebrity Net Worth, "Roaring Kitty" paid around $56,000 to build a stake of 50,000 shares, which are now worth $16 million. 

He has 16,000 followers on Twitter and 57,000 YouTube subscribers.

Which companies have they helped?

Video game retail store GameStop has been the main target.

Users in the Reddit group came together to send the company's shares up a shocking 130 per cent on Wednesday.

The WallStreetBets followers went on a GameStop buying spree, which pushes up the shares and puts pressure on short sellers to make purchases to "cover" their bets to avoid steeper losses.

The process is known on Wall Street as a "short squeeze".

The struggling video game store's shares are up a total of 1,700 percent percent since the beginning of January, from $17.25 per share to $347.51 on Wednesday.

GameStop's three largest investors have made $3billion since the stock prices began climbing, according to the Daily Mail.

GameStop isn't the only company being targeted by the Wall Street trollers.

Stock skyrocketed for other companies that had been heavily shorted by Wall Street firms as well.

AMC Entertainment's shares jumped a whopping 300 percent on Wednesday, and BlackBerry's were up 33 percent.

Wall Street experts warn, however, that the skyrocketing stock prices will not likely last long, as they do not reflect the health of the businesses.

Hedge funds Citron and Melvin Capitol said on Wednesday that they had closed out their short positions after suffering undisclosed losses.

Experts speculate those could be in the billions.

Heavily shorted Australian stocks Webjet, Tassal Group, Inghams Group Ltd and InvoCare all climbed on Thursday, while Sydney's benchmark ASX 200 index fell 2 percent.

British publisher Pearson, drugmaker Evotec and commercial property firm Unibail-Rodamco, all big gainers in the past week, dipped in early deals.

Source: Read Full Article