Retail traders who discuss and plan trading strategies on online forums such as Reddit’s r/wallstreetbets last year collectively bet on stocks that possess high short interest to squeeze large hedge funds. The biggest short squeezes in history helped GameStop Corp. (GME) and AMC Entertainment Holdings, Inc. (AMC) skyrocket in price. While several other stocks also witnessed huge, short-squeeze rallies last year thanks to Redditors’ interest in them, the euphoria fizzled out quickly, leading the fundamentally weak stocks to significant price declines.
Last year's trading frenzy also marked the emergence of new-age investors who entered the security markets with little or no trading experience. With advances in technology and zero-commission trading platforms, many new investors opened app-based brokerage accounts and began trading in meme stocks like GME and AMC.
