How Redditors Find The Next GameStop Stock


There is a method to insanity on WallStreetBets. For every stock that rockets like GameStop Corp. and AMC Entertainment Holdings Inc., many more names promoted on the Reddit site are not released.

A Wall Street Journal analysis of millions of posts on WallStreetBets, the performance of the most mentioned companies each month, and interviews with traders show what makes a stock take off.

Stocks with the highest chance of success tend to have low prices, generally under $ 25 per share, and are traded lightly. Low stock prices allow small-time traders to accumulate holdings more easily and can sometimes mean cheap valuations. Stock prices of stocks that trade lightly can go up or down more easily than stocks of stocks that are traded more frequently.

Large companies with high prices and stock volume, such as the third most mentioned company last year, Apple Inc., tend not to get carried away by what happens on the message board, according to Hudson Cashdan, co-founder of TopStonks.com, a website that tracks the actions mentioned on Reddit.

Success stories often share common traits with actions selected by professionals. Companies appear to be undervalued by some measures and have short-term catalysts to improve their business or at least generate enthusiasm.

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