GME Stockprice & Reddit Retail Investor

Introduction

“War” first appeared on a forum called “Wall Street Bets.”

This forum is Wall Street Bets (WSB), a subforum of Reddit.The forum’s highly speculative and leveraged trading, which ignores basic investment principles and risk management, is viewed as akin to gambling by outside. They created a slogan, “YOLO,” meaning You only live once.

An image posted on the WSB in June 2019 caught the attention of a few people at this “gamblers” venue.

The picture was taken by a user named Deep Fucking Value (DFV), who showed a picture of himself buying GameStop (GME) shares in June 2019, with a target price of $8 per share.The move was described by others on the forum as “baffling,” given that GameStop was a failing company and would have been a bad deal to buy. For DFV, the forum users first mocked, then discouraged and worried, DFV did not pay attention.

On January 11, Chewy co-founder Ryan Cohen joined GameStop’s board.The move was the first inflection point for GME’s share price.

Cohen has his own ambitions, and he wrote a letter to GameStop’s board urging the company to transform itself quickly and “make the company the Amazon of gaming.”So on Jan. 14, a group of WSB users followed Cohen’s lead, pushing GME’s share price up to $40, where it was in 2013.

But the blow will soon come.On Jan. 19, short seller Citron said it was betting against GameStop and mocking at retail buyers of GME’s stock. “Tomorrow at 11:30 a.m., Citron will be running a live show telling you five reasons why people who buy GME are idiots.” The founder Andrew Left arguing that the stock is significantly overvalued.

Left’s disdainful attitude was too much for retail investors to bear, and they decided to fight back against Wall Street’s self-righteous elite. On January 20, a large number of individual investors are assembled, sniper the short organization that is a representative with Citron.

The “war” began.

So how was Reddit Retail Investor performing in WSB last week and what did the people think during this carnival and what are they concerned about?

This article will use PRAW to analyze posts of DeepFuxxingValue, the leader of the GME event, as well as other people’s comments on him in the forum, so as to explore the ideological dynamics and intentions of everyone in this event.

Let’s take a look at what people were thinking during the heat of the “war”

I used Twitter development account and Tweepy as a method to download his comments from his posts on Jan 28, which comments most by people, 24.1k comments so far. In this dataset, it contains 3249 tweets. It includes those features(tweet.id_str, tweet.favorite_count, tweet.retweet_count, tweet.created_at, tweet.text.encode(“utf-8”)) as we may need.

The Process of Data Explore

Get API Access:

Before we do the analysis, we need to understand how we can get somebody’s Reddit information. In order to use PRAW to retrieve information, we need to have Client ID & Client Secret(https://www.reddit.com/prefs/apps)These two values are needed to access Reddit’s API as a script application, User Agent(https://github.com/reddit-archive/reddit/wiki/API). Then we need to use Reddit API and PRAW package in Python to get the information we want. You need an instance of the Reddit class to do anything with PRAW. There are two distinct states a Reddit instance can be in: read-only, and authorized.

import praw

reddit = praw.Reddit(
    client_id="my client id",
    client_secret="my client secret",
    user_agent="my user agent"
)

Extracting comments with PRAW On a specific Submission

Since I’m looking at DFV, we need to retrieve the information necessary for content mining those reviews. Below I show what the code for executing this step looks like. The first line of code showcases the site of searching for coments by reddits.

url="https://www.reddit.com/r/wallstreetbets/comments/kie1dk/gme_yolo_update_dec_22_2020/"
submission = reddit.submission(url=url)
for top_level_comment in submission.comments:
    print(top_level_comment.body)

Encountered Bugs: While running this you will most likely encounter this exception. This submission’s comment forest contains a number of MoreComments objects. These objects represent the “load more comments”, and “continue this thread” links encountered on the website. While we could ignore MoreComments in our code, like so:

submission.comments.replace_more(limit=0)
all_comments = []
for top_level_comment in submission.comments:
    all_comments.append(top_level_comment.body)

List of Comments that we got are here

Clean it: Remove all the symbols and stopwords

import re
def remove_symbols(txt):
    return " ".join(re.sub("([^0-9A-Za-z \t])|(\w+:\/\/\S+)", "", txt).split())
comments_only_words = [remove_symbols(comment) for comment in all_comments]
comments_only_words[:10]

comments_words = []
for sentence in comments_only_words:
    comments_words.append(sentence.split(' '))
comments_words[:1]
import nltk
nltk.download('stopwords')
from nltk.corpus import stopwords
stop_words = set(stopwords.words('english'))
words_new = [[word.lower() for word in words if not word.lower() in stop_words]
              for words in comments_words]
words_new[:5]

Exploratory Data Analysis

There are 487 comments in that days post. Among those comments, there are 4144 words.Our aim is to find the comments that has the maximum number of words.

import itertools
import collectionswords_list = list(itertools.chain(*words_new))
counts = collections.Counter(words_list)
counts.most_common(15)

The maximum number of words are “still” which is 200 out of over 4k words. After that “im” has the maximum number of shows which is 121.

import matplotlib.pyplot as plt
import pandas as pd
word_frequency = pd.DataFrame(counts.most_common(15),
                             columns=['words', 'count'])
fig, ax = plt.subplots(figsize=(8, 8))
word_frequency.sort_values(by='count').plot.bar(x='words',
                      y='count',
                      ax=ax)
ax.set_title("Common Words Found in Comments")
plt

The peak is from the word ‘he’s’, ‘I’m’, ‘still’. This comes from some interesting slogans: “He’s still in, I’m still in.”,“You hold, I hold, We all hold. The hedges will fold.” as DFV is a clear beneficiary of the movement.

Conclusions

Finally, on January 26th Melvin Capital, one of the earliest interveners, announced a $3 billion monthly loss, and received a joint capital injection from Citadel and Point 72 to help offset its huge losses. January 27th formally announced the withdrawal from the “war”, the stock will be liquidated. Melvin Capital is said to have lost 53% of its fund’s assets. In a Jan. 29 statement, the once-successful Citron said, “Twenty years ago, we founded Citron to beat Wall Street, not to be an institution, but to publish our research publicly online.We pride ourselves on bringing down institutions, but today we find ourselves the establishment, putting the cart before the horse.”Earlier, Citron’s social media accounts were hacked, forcing it to create another account with a “no fight sign” announcing that it was “putting safety and family first” and “no longer commenting on GameStop.”

Stories of people using the money to pay off long-overdue debts or even student loans began to circulate on the forums.

Discussion and Limitation

Some limitations include the number of data, this study has collected all comments from r/DeepFuckingValue subreddit and Python Reddit API Wrapper (PRAW) which over 20,000 rows of data. Also, during the data cleaning process, I lost many data rows as they are unknown or N/A value and contain symbols or emojis. It is a very small sample, I only choose the post which comments most, next time I should take more comments from different reddits, which will give us more informations about what people are thinking during this incident. These very limited results and outcomes are based on people’s comments only during the day of the experiment.

Further, we can also use the information of users who made the comments to find what thoughts are popular in which regions. We can also analyze the average age groups of people that comments a particular submission.

References

1. WSJ | Gamestop mania reveals power shift on wall street and the pros are reeling
2. https://praw.readthedocs.io/en/latest/getting_started/quick_start.html
3. https://www.reddit.com/user/DeepFuckingValue/