10. June 2021 | 11:00 CET
AMC Entertainment, wallstreet:online, Nikola, Adler Modemärkte - What a feast!
Thousands of private investors join forces via online forums such as "WallStreetBets" on Reddit to buy shares in a concerted effort to destroy the business of hedge funds that sold the stock short. The phenomenon was first practiced with game retailer GameStop earlier this year. Now other papers shorted by the institutional investors followed, such as AMC Entertainment, Nokia and Blackberry. New opportunities are discussed daily on the forums. Due to the volatility of the stocks and the growing trade in meme stocks, mainly online brokers profit from the lively hustle and bustle.
time to read: 3 minutes by Stefan Feulner
Profiting from the Crisis
A new generation of investors grew up in the wake of the Corona pandemic. Above all, offers from neobrokers with their "mobile-first strategy" were gladly used by Generation Z to devote themselves to the capital market around shares, funds, ETFs and co. in addition to their everyday Fortnite playing. According to the German Stock Institute, there were 28% more shareholders in 2020 than in the previous year. In the target group mentioned above, there were 600,000 young people, an increase of 70% from 2019. According to the CEO of wallstreet:online AG, Matthias Hach, 80% of users on Smartbroker's platform are 54 years old or younger. In addition to speculation about which share will be shot "to the moon" next, retirement provision, in particular, plays a major role in this age group. Here, the manager sees great catch-up potential, especially in Germany. Overall, German citizens have set aside more than 340 billion euros, only 17% is invested in shares or funds for old-age provision.
Decades of development
The course for a successful start of Smartbroker, launched at the end of 2019, was laid by the wallstreet-online group around founder André Kolbinger at the beginning of the 2000s. With the establishment of by far the largest publisher-independent financial portal operator in the German-speaking world and grown portals such as wallstreet-online.de, boersenNews.de, FinanzNachrichten.de and ARIVA.de, more than 500,000 registered users are ready to conduct their stock market transactions in the future via Smartbroker, which belongs 95% to the Group. Currently, the user base is already at 135,000. The Berliners' ambitious goal is to break through the barrier of 200,000 trading persons before the end of this calendar year. Customer deposits already exceed EUR 5 billion.
Well equipped for the future
wallstreet:online intends to achieve this ambitious goal by integrating its Forum and Broker products more closely. New features on the various platforms are designed to encourage users to trade directly. However, to compete against the neo-brokers in the mobile sector, the most important factor for the future is developing a smartphone app. This app is to be launched in the first half of 2022. A total of EUR 12.5 million has been earmarked for customer acquisition. The significant growth effects should already be visible in the second half of this year.
If one compares the wallstreet-online Group with industry peers such as Trade Republic, one sees the wide valuation gap. While the stock market value of w:o with a customer base of 200,000 and customer funds is EUR 408.45 million, the unlisted competitor with a self-stated base of "greater than 1 million" and investor funds of EUR 6 billion has a valuation of EUR 4 billion.
Too expensive even for the gamblers
German stocks such as windeln.de and Adler Modemärkte also saw the phenomenon of exploding share prices without a fundamental background. Investors in the online retailer of baby, children and family products could not believe their eyes as the Company's share price, which had been relatively unsuccessful in recent years, rose by a whopping 600%. Since 2012, the Company has failed to profit in any year, and even sales have been declining since 2017. The reason for the share price explosion was, in fact, a post on WallStreetBets, which many small investors used to get in.
An even bigger number is currently happening with AMC Entertainment, the current number 1 among Reddit disciples. Since the beginning of the year, the price fluctuations, which have pushed the value up by more than 2,500% since the beginning of the year, are even too much for its own investors. Trey Collins, a YouTuber and influencer for the Redditians, said in an interview on CNBC that the long-term value of AMC does not match the current price. He estimates that it is only USD 20 to 25, more than half below the current price. On his channel "Trey's Trade," which boasts 319,000 subscribers, he also issued a statement yesterday morning to reassure the community.
In addition to the stocks as mentioned above, the shares of Nikola, a specialist in the production of battery and fuel cell trucks, are also running hot. The Redditians see similarities in the price pattern in the current chart as with the GameStop share in January. With a short ratio of over 20%, Nikola also possesses the best conditions for a short squeeze. The downward trend formed since November 2020 was broken with high volume last week. Currently, the value is at USD 18.73; the annual high was marked in January at USD 30.40.