What happened
Do you think you can use the activity on stock discussion boards to find the next hot meme stock, and send your portfolio "to the moon"? Don't be too sure about that.
Traders who search discussion boards such as WallStreetBets on Reddit for clues to find the next hot stock before it pops may be disappointed today to learn that while the popular AMC Entertainment Holdings (AMC) ticker is climbing 4.3% as of 11 a.m. EDT, and Clean Energy Fuels (CLNE -1.75%) is up 9.6%, the even more popular GameStop (GME 2.56%) ticker is sliding 3.4%.
Image source: Getty Images.
So what
This is kind of the opposite result from what you'd expect, if you base your stock trading on what the discussion boards are telling you.
According to data from WSBSentiment.io, you see, AMC is the second most mentioned stock on the WallStreetBets forum, with 8,274 mentions over the last 24 hours. Logically, you might expect it to greatly outperform Clean Energy, therefore -- which at No. 3 on the list has only 1,789 mentions. But instead, Clean Energy stock is doing more than twice as well.
Even more confusingly, GameStop, with 9,591 mentions, remains the hottest and most talked about stock on Reddit. But in the real world, on the New York Stock Exchange, its stock is going down, not up.
Now what
By this point in time, it almost goes without saying that there's no actual news driving these stock gains and losses. To the contrary: Of the three stocks named above, GameStop is the only one that has actual substantive news about it in the past 24 hours.
Specifically, Barron's reported yesterday that on June 25, GameStop stock will be added to the Russell 1000 index of companies, while AMC remains too small to make the cut. Although irrelevant to the business, adding GameStop to the index will require mutual funds and ETFs that track the index to buy GameStop shares so that their holdings accurately reflect the makeup of the index. That buying activity is likely to push GameStop shares higher -- and yet, AMC stock is up today, while GameStop is down.
It's the opposite of what you'd expect. It's the opposite of what activity on the Reddit boards tells you to expect. And it's a good lesson in why you can't depend on discussion boards to predict the future.
