- The flurry of Redditors taking on Wall Street appears to have resulted in a usage boom for share trading apps.
- Apps like Robinhood and WeBull have climbed in U.S. iPhone app rankings, according to data from AppAnnie.
- Hargreaves Lansdown analyst Susannah Streeter warned investors not to get "swept up in a frenzy of speculation."
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A wave of retail investors have challenged GameStop short sellers in online forums. The Reddit community r/wallstreetbets, which has 2.8 million members, is awash with users encouraging each other to pile on and keep pushing the stock higher.
They have found other favorites, including software firm BlackBerry and retail chain Bed Bath & Beyond.
The flurry of Redditors taking on Wall Street appears to have resulted in a usage boom for share trading apps that are used by mostly younger, millennial traders. U.S. investing app Robinhood, for instance, hit a record on market intelligence firm Apptopia's app rankings on Tuesday.
Robinhood ranked No. 8 in the company's list of top iOS apps in the U.S. overall, its highest ranking to date. It's seen usage creep up over the past couple of weeks, with the number of daily sessions — registered when a user opens an app — rising to nearly 3.8 million on Jan. 26 from almost 3.6 million on Jan. 17.
Robinhood was ranked the No. 1 financial app on iPhones Tuesday, according to App Annie, another app data company. Another trading platform, WeBull, also rose in popularity, surging to the No. 9 spot among other finance apps.
"Like other brokerages do, we monitor volatility and we take steps as appropriate like raising the margin requirements," Robinhood co-founder Vlad Tenev told CNBC's "Squawk Box" on Wednesday.
"I do think it's wrong to assume though that most of our activity is characterized by trading of volatile stocks."
Meanwhile, Britain's Freetrade said the value of buy orders for GameStop in the first two trading days of the week was already 177% higher than for all of last week. BlackBerry buys saw a 163% increase during that same period.
The start-up, which has over 300,000 users, said the number of premium accounts on its Freetrade Plus subscription brand have more than doubled since Jan. 1. GameStop and some other stocks with high levels of short interest, like Bed Bath & Beyond, are only available on Freetrade Plus.
"This is a wakeup call for Wall Street and the Square Mile that retail investor flows are meaningful and need to be taken seriously," Dan Lane, senior analyst at Freetrade, told CNBC.
"If nothing else, the most recent episode should register the assertion from new retail investors that they want to be part of building their cash piles rather than handing the job off to someone else."
Incumbent U.K. brokerage Hargreaves Lansdown said GameStop was the second-most popular traded overseas share on its platform last week, while BlackBerry was the fifth-most popular. GameStop was the most-viewed stock on its platform Wednesday.
"Short sellers had bet that this Texas-based company with more than 5,000 stores in malls across the world could be badly hit by the pandemic downturn," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told CNBC.
"A surge in interest in the company on social media platforms, particularly Reddit, has instead sent GameStop's share price in the opposite direction. It appears on some chat groups communities of traders have adopted a 'game' mentality, deliberately buying GameStop shares because they were shorted."
GameStop ripped higher in extended trading Tuesday, surging more than 60% and at one point hitting a high of $360. The after-hours jump came after Tesla CEO Elon Musk tweeted about the mania, linking to the wallstreetbets subreddit.
"Although some of these shares have become more sought after on our platform, we are encouraging traders to diversify their holdings and invest for the longer term instead of short-term gains," Streeter said.
"We are advising people to take a deep breath before following the herd and that means doing their homework and being wary of being swept up in a frenzy of speculation.''