Media blitz falsely claims WSB has moved on to silver, turns out Citadel is large owner of the metal
After the subreddit WallStreetBets started a frenzy resulting in many retail traders buying GameStop stock in hopes of pulling off a short squeeze that would result in big losses for many hedge funds including Melvin Capital, a media blitz started on Monday saying that the Reddit page has turned its attention to silver and away from GameStop.
That is not true if you take a look at the WSB reddit page.
Melvin Capital, one of the main shorts against GameStop, lost 53 percent of its investments in January and received a cash injection of about $2.75 billion from Citadel LLC and Points 72 Asset Management, per the Wall Street Journal.
With the hedge funds reeling after giant losses in January, stories from many major media outlets around the country ran saying the Reddit page has moved its attention away from GameStop and to silver.
It must be noted that Citadel, the company that helped bail out Melvin Capital, owns six million shares of the iShare Silver Trust and another 17 companies/ETFs related to silver, according to Bloomberg.
It seems that a lot of these stories ran without taking a look at the WallStreetBets page to confirm. If someone takes a look, it is clear the attention has not been diverted to silver.
Instead, WallStreetsBets is still looking to hold the line on GameStop and to execute a short squeeze. The evidence is below.
As of the Monday close GameStop finished the day down nearly 31 percent. However, the trading volume dropped to 34.2 million on Monday, down from over 50 million on Friday and over 150 million during the middle of last week, per Yahoo Finance.
The lower trading volume could suggest that the retail traders have held on to their positions and that the GameStop story is not yet over. If that is true, the drop in GameStop's price might not be due to the actions of retail traders.
Only time will tell.
Here is CNBC host Jim Cramer on how hedge funds can manipulate the stock market.
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Ryan is a recent graduate from the University of North Carolina at Chapel Hill and majored in Business Journalism. He has written in the past for SB Nation's Silver and Black Pride, USA Today Sports Media Group, North Carolina Business News Wire, the Daily Tar Heel, and has worked with Ice Cube's BIG3 basketball league.