In an off the court story, the battle between the Wall Street professionals and the WallStreetBets group that formed on Reddit continues.
Mavs owner Mark Cuban gave his position on it, telling CNBC that the strategy that retail traders are using is not unique.
“There are many hedge funds that have made a lot of money over the years targeting heavily shorted stocks. I don’t think this is anything different. It’s just the people who are making the push aren’t who we expect them to be and so that’s why I like it,” Cuban said.
Those participating in WallStreetBets have been targeting stocks that are heavily shorted (short selling is a bet that a stock’s price will fall and those who make that bet owe more as the price goes up). Over the past two days, they’ve seen resistance in their effort to buy additional stocks, ranging from app issues to formal regulation by trading apps.
Robinhood—among the apps that completely restricted trading on Thursday— will “allow” some trading of stocks like GameStop, AMC, and others on Friday, the company said via email. The company restricted trading without notice on Thursday and in some cases, sold stock on behalf of users in an effort to “protect consumers.”
The outrage over the company’s decision took over the media cycle for hours on Thursday, seeing condemnation from Barstool’s Dave Portney, Senator (R-TX) Ted Cruz, and Congresswoman (D -NY) Alexandria Ocasio-Cortez among others.
The move by Robinhood and other trading apps is currently being investigated by lawmakers.
Putting aside legal aspects of these companies changing the rules on consumers mid-game, Cuban believes the group of retail investors rising up is a good thing from a macro-perspective.
“When you bring people out of nowhere to really show the inefficiencies of the market, it’s a good thing.” the Shark Tank star said.
Cuban has long been a supporter of zagging when other people zig, consistently voicing support for smart, against-the-grain moves.
“People who bought it just to speculate, some will make money,” he said. “Some will lose money but that’s just the way the market has always worked. The only thing that’s really changed is the speed and the density and the reduction in friction for smaller traders to trade.”
FortyEightMinutes, LLC does not offer any financial advice, hold positions in any of the aforementioned stocks, or use the Robinhood app. We also don’t condone rule changes mid-game or -mid-activity due to boo boo woo booing. Those two sentences may have no correlation.
