- Retail traders who are pushing up memes stocks have “holding power,” said the former CEO of E * Trade.
- These investors have powerful tools, including social media and trading apps, he said.
- When his own son asks about mem stocks and dogecoin, he says it’s all about the fundamentals.
- See more stories on the Insider business page.
The retail traders driving the meme market frenzy are “here to stay,” but the current rally in AMC Entertainment shares is not, Karl Roessner, former CEO of E * Trade, said in interview with CNBC.
“It’s not going to end well,” Roessner said of the AMC rally. “I think historically we’ve seen this in the past, but I think this group has the power to stay.”
AMC shares jumped 27% on Monday after a record week in the stock which was largely driven by retail traders on Twitter and Reddit.
AMC, the world’s largest movie channel operator, was part of a new trend in ‘memes stocks’ earlier this year when retail investors on Reddit threads, including Wall Street Bets, started flocking in. some actions like GameStop in order to squeeze short sellers.
Since then, Wall Street Bets has grown into an army of retail traders with over 10 million users.
In the interview with CNBC, Roessner, who is now the CEO of Lefteris Acquisition Corp., said that with the availability of social media and trading platforms, the group has “powerful tools” at their fingertips. which gives him “the power to remain”. Applications like Robinhood, WeBull and Public, grew in size amid interest from new investors.
He said his own sons, who both have E * Trade accounts, have started investing.
“They keep telling me ‘Why don’t we own dogecoin, or why don’t we get involved in one of these meme stocks?’ And I always bring it back to the fundamentals, ”he told CNBC. “Then they hear from their friends that they just won $ 10,000 on dogecoin and they’re going to take the rest of the summer. So how do you fight that?”
He said financial literacy education is key. For example, all the money that retail traders invest in bull stocks should be venture capital, he said, because there is a chance that a person could “lose it all.”
“I always worry about the last retail trader who holds the bag when the music stops,” he said, noting the last retail traders to invest during the dot-com bubble or before the stock market crash that caused the Great Recession.
Regarding AMC specifically, Roessner said he applauded management for raising capital to address balance sheet issues. But overall, “With no serious strategic commitments from this company, it still isn’t worth what it is currently negotiating for.”
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