The Effects of Social Media

In January, GameStop shares reached US$483, an amount almost 25 times above its closing in 2020, when it was close to R$20. The story of the electronic game store and the effects of social media were the theme of this Wednesday’s webinar hosted by Turim.

During the online event, our strategist Nelson Abrahao explained that similar cases have already happened in the past. The difference is that now the movement to inflate the share price happened through internet forums.

— Retail and under-resourced investors have started using sub-forums on social medias to unite their next steps in relation to GameStop’s actions. This is the short squeeze,” he explained.

Our guest Julian Chediak, founding partner of Chediak, Lopes da Costa, Cristofaro, Menezes Côrtes, Simões Advogados, also highlighted that this was already something large traders did in the past– what was new this time was that the movement was made by small investors.

– It was the “sardines” revolt. The big investors, “sharks”, already short squeezed, but always in a covert way. Now, “sardines” openly say they are meeting for this purpose.

Nelson believes this is an isolated event. – What managers are doing is spreading risks. In the end, the big way to defend yourself is through  diversification – he concludes.