The Reddit crowd has found a cutting new tactic in its war against Wall Street
A percolating theme among retail investors came to a boil on Thursday and some meme stocks ended the day simmering
It didn’t take long thereafter for those Apes to decide that this sort of indirect ownership was fueling short sellers, who borrow shares and create the kind of synthetic trading environment that some retail investors believe has allowed hedge funds and other institutions to execute shorts and avoid the pain of being squeezed themselves.
Computershare declined to share specific data outlining the magnitude of inflows that it has seen. But if a quick perusal of Reddit is any gauge of interest, with users posting screenshots of what they describe as newly activated accounts, the Abbotsford, Australia transfer agent is seeing a good flow of new business.
But for Reddit’s retail Apes, there is one other huge perk to direct registration in meme stocks: keeping brokers, short sellers and market makers from creating a condition in which the amount of shares sold short in any given company exceed the total amount of shares outstanding. So-called naked shorting, where investors profit from bets on stock without owning it is illegal on Wall Street, but many Redditors believe that naked shorting is alive and well due in part to indirect ownership.
“This buying spree is among the brokers,” mused Trimbath. “At this point, it’s easier to come up with the money than to come up with the shares.”
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