Meme stock moniker 'charming,' but momentum trading not new

Reddit co-founder Alexis Ohanian informed CNBC on Thursday that the meme stock frenzy — which traces its roots to the net discussion board web site he helped create — is what occurs when momentum investing is amplified by expertise.

“Really, the existence of people getting whipped up and excited about a stock has happened, you know, it’s happened around barbershops. It’s happened around bars,” Ohanian stated in an interview on “Squawk Box.” “Retail investors have just never been able to jump on an opportunity in real time, and this is what it’s like in the age of ubiquitous social media.”

“Meme stocks, it is a charming name, but I think at the end of the day, momentum investing is nothing new,” added Ohanian, who in 2005 co-founded Reddit alongside present CEO Steve Huffman. Ohanian, now a enterprise capitalist, stepped down from Reddit’s board final June.

The highlight on varied meme shares has brightened in recent weeks, months after the saga first captured Wall Street’s consideration in January with GameStop as essentially the most outstanding instance. Stocks which have lately been touted on Reddit message boards and have seen their costs soar embrace AMC Entertainment, Clover Health and Clean Energy Fuels.

Ohanian acknowledged that skilled traders are additionally leaping in on the motion, echoing feedback Wednesday from the CEO of market maker Virtu Financial, Doug Cifu, who informed CNBC “this is not solely a band of retail traders trading these stocks.”

Even so, Ohanian stated better involvement within the markets from particular person traders is a long-term optimistic — although there’s danger. “We absolutely need more financial literacy … but the thing we have to keep in mind is, this is here to stay,” he stated.

“We’ve crossed Rubicon, and it doesn’t matter one platform or another. This is how people are sharing content. They’re able to open an app and execute a trade, and it’s only going to get easier,” Ohanian added. “It’s only going to get more normal for a generation coming up with this. They’re not even going to conceive of the idea of calling a stock broker, or for a lot of folks, hiring a professional.”

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