'The Reddit crew is looking for underdogs that Wall Street pros think are relics,' writes LaMonicaBuzz
BlackBerry. AMC. Nokia. GameStop. This quartet, along with others such as insurance startup Clover Health, mobile shopping app developer ContextLogic and fast food chain Wendy's, have become darlings of the Reddit crowd. So why do some stocks go from being unloved on Wall Street to diehard favorites of the Reddit army? What all these stocks have in common is that a fair number of short sellers are betting against them.
AMC shares soar to an all-time high 02:27If a short-seller borrows a stock trading at $50 and sells it but the stock then climbs to $75, that's a $25 loss. If it goes to $100, the short is $50 in the red, and so on. They want to get out quickly to reduce their losses, and that creates the squeeze."This is the perfect storm for an epic short squeeze: the mother of all short squeezes," said one Reddit user about AMC on Thursday.
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