Securities and Exchange Commission (SEC) is probing the GameStop saga and on Friday suspended trading in 15 companies due to unusual trading activity and apparent attempts on social media to artificially inflate their stock prices. The company notes bots can be used on its platform for creative or innovative purposes. The social media platforms generally try to weed out harmful bots, said Barr.Ī representative of Twitter said "bots" had become a catch-all term that can often mischaracterize the nature of the account. Representatives for YouTube, Facebook and its Instagram subsidiary did not respond to requests for comment. The company did not analyze Reddit data, but Barr said he would expect to see a similar pattern of activity on Reddit, indicating bot-like or coordinated management of conversations.Ī representative for Reddit did not comment beyond Huffman's testimony. Thousands of fake accounts can be purchased for as little as $200, it said. It doesn't have the exact same pattern every day for a month," he said.īased on its authenticity scoring system, PiiQ estimates there are tens of thousands of bot accounts hyping GameStop, the meme stocks, and Dogecoin, a cryptocurrency swept up in the frenzy. When you think of organic content, it's variable in the day, variable day-to-day. "We saw clear patterns of artificial behavior across the other four social media platforms. Such patterns are indicative of bots, said Aaron Barr, co-founder and chief technology officer of PiiQ. PiiQ said it identified very similar daily "start and stop patterns" in the GameStop-related posts, with activity starting at the beginning of the trading day, followed by a large spike at the end of the trading day. For comparison, it also assessed posts on an unrelated set of stocks. "The sun is shining on AMC," CEO Adam Aron said in a statement on January 25, adding that any talk of imminent bankruptcy was "completely off the table.A startup that focuses on social media risks, PiiQ said it examined patterns of keywords such as "Hold the Line" and GameStop's stock symbol, "GME," across conversations and profiles prior to the Jan. Weeks after warning that it could go bankrupt, the company leveraged the retail-trader frenzy to stay afloat. Some companies have used the phenomenon to their advantage AMC paid down debts and sold stock at extraordinary highs to extend its cash runway.
GameStop and most of the other so-called meme stocks still trade well above where they sat at the start of the year.
Those policies have been somewhat reversed, allowing the army of day traders to continue buying at least some shares this week. Several trading platforms last week temporarily blocked investors from buying shares of GameStop, AMC, and other highly volatile stocks, saying they were trying to protect clients from unprecedented market risk. It's possible the retail investors were encouraged by the easing of trading restrictions by Robinhood and other broker-dealers. The parabolic nature of the stocks' rally also lends itself to a similarly steep crash as profit-taking spurs others to sell out of concern that they'll be the last ones holding their shares.
More-seasoned investors had repeatedly said that while some day traders could mint small fortunes through the Reddit-fueled surge, many who entered the trade late stood to lose big.
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