How social media moves markets: Analyzing GameStop (GME) using social listening data

After five years of downward movement, GameStop (GME) shares skyrocketed this week—going from a closing price of $4.28 per share on January 27, 2020 to $345 on January 27, 2021, one year later. This morning, shares reached $490 in pre-market trading.

So what sparked this more than 7,200% increase in GME—and a 689% run just this past week?

In a word, Reddit. What started with a thread on r/WallStreetBets, a community where more than 3.1 million subscribers discuss aggressive trading strategies, drove such a significant increase that trading of GME was halted several times. President and CEO of Nasdaq, Adena Friedman, stated on Wednesday that the exchange would potentially halt the stock if it detected unusual trading activity that matched conversations on social media.

"We definitely have seen a significant increase in retail participation in the market throughout the year," says @adenatfriedman. "We do have technology that evaluates social media chatter'and match that up against unusual trading activity'we will potentially halt that stock." pic.twitter.com/UWvg53YFI6

— Squawk Box (@SquawkCNBC) January 27, 2021