The battle between retail investors of GameStop (NYSE: GME) and its institutional bears reached a pinnacle on Jan. 26 as the stock reached an all-time high of $380 per share. Over the past year, enthusiasm among traders of the legendary r/WallStreetBets subreddit was mostly responsible for its mouth-watering 7,600% return. As hedge funds who bet on the brick-and-mortar video game retailer lost multiples of their initial investment on their GameStop short, they began frantically cutting their losses by buying the stock back at whatever price possible. This added even more fuel to the flames and led to an unstoppable, monstrous rally in the share price.
After GameStop's spectacular short squeeze, investors are now wondering if other heavily shorted stocks that are popular among contrarian Reddit investors, such as AMC Entertainment Holdings (NYSE: AMC) , CEL-SCI (NYSEMKT: CVM) , and BlackBerry (NYSE: BB) , could replicate GameStop's return and make shareholders wealthy in a very short period of time.
As it turns out, discipline becomes paramount when the value of one's holdings goes up so high and so fast. While GameStop stock may have had genuine reasons to rally, not all three of the stocks mentioned can claim similar justification. Let's take a look at which ones to buy and which ones to avoid.
For further details see:
Should You Buy These 3 Hot Reddit Stocks Before It's Too Late?