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GameStop, AMC, and other Reddit favorites climb as day traders look to reignite momentum

GameStop, AMC Entertainment, and other so-called meme stocks gained on Monday as retail investors looked to fuel new rallies.

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The video-game retailer rose as much as 10.1%. AMC climbed 13.7%. BlackBerry and Express swung 5.2% and 7.4% higher, respectively.

The buying frenzy that sparked a rush into GameStop (GME) and dogecoin recently was likely amplified by trading bots, according to analysis from a Massachusetts-based cybersecurity company.

The stocks have traded with elevated volatility in recent sessions as day traders congregating online try to repeat the surges seen at the start of the year. Recent posts on r/wallstreetbets and other trading forums praising the upswing garnered thousands of comments and votes of approval. And while the companies trade well below their January highs, they still boast huge year-to-date gains.

The gains follow broad selling across the Reddit favorites. The stocks tumbled in Friday trading after rising the session prior, underscoring the back-and-forth action seen since January’s extraordinary rallies.

Retail investors looking to lift prices again face a tougher challenge. The Reddit-savvy traders had the element of surprise when they first bid up shares, and their ability to shock the market establishment quickly publicized the trade. The stocks’ unusually high short interest also exacerbated the rallies as bearish investors had to buy shares to cover their souring bets.

Those surges are old news now, and Wall Street has caught on to the Reddit traders’ antics. Hedge funds started tracking posts on relevant forums to monitor which stocks day traders could target next.

Separately, regulators are looking into the January price action to determine its legality. While the Reddit crowd has repeatedly indicated they simply “like the stock,” those warier of the sudden climbs suggest the online communication could qualify as market manipulation.

A new report suggests bots also played a significant role in driving hype around the trade. Fake accounts on major social media platforms amplified calls to buy and hold shares of GameStop and other relevant stocks, Reuters reported, citing analysis by cybersecurity company PiiQ Media. Still, it’s unclear how much of an impact the bots had on the rallies.

Lawmakers have already taken steps to better understand the market phenomenon. The House Financial Services Committee held a hearing in February on the matter, and the Senate Banking Committee is poised to do so.

As reported by Reuters on Saturday, PiiQ Media says it found patterns in posts and keywords posted to social media platforms during set times each day suggesting bots were driving the craze. It also compared such posts to unrelated stocks for comparison.

However, the company is uncertain how much impact the bots may have played in driving trading.

Based on its analysis, the company says foreign actors may have helped stir up the craze in buying of GME and other “meme stocks” when Reddit groups united to drive prices higher and “short squeeze” large hedge funds.

That’s despite Reddit’s CEO Steve Huffman’s comments to a U.S. congressional committee in February in which he denied bots or fake accounts had played a “significant role” in message traffic on the GameStop subreddit, r/GameStop.

In its analysis of posts on Twitter, Facebook, Instagram and Youtube, PiiQ’s analysis examined patterns of keywords such as “Hold the Line” and “GME” in conversations between Jan. 28 and Feb. 18.

The analysis shows regular frequent posting at set times during the trading day, according to the report.

“We saw clear patterns of artificial behavior across the other four social media platforms,” said PiiQ CTO Aaron Barr in the report. “When you think of organic content, it’s variable in the day, variable day to day. It doesn’t have the exact same pattern every day for a month.”

The cybersecurity company believes there are currently tens of thousands of bot accounts hyping GME, other meme stocks and DOGE.

While the company did not analyze data from Reddit posts, Barr said a similar pattern of of bot activity manipulating trader conversations on the social media platform was likely.

GameStop closed at $101.74 per share on Friday, up about 428% year-to-date.
AMC closed at $8.01, up 270% year-to-date.

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