Day traders continue proving their ability to create massive price movements using social media posts and videos despite brokers’ trading limits.
Although the broker’s strategy of imposing limits on few stocks helped in soothing the social media-fueled rally, the day traders came back with a full-force – sending ATA Creativity (NASDAQ: AACG) stock price 950% higher in a single day.
Any catalyst does not back the stock price movement. Its shares volume soared to 310 million in Thursday trading compared to an average volume of 52K shares.
Pump and Dump Schemes are working
Pump and dump is an illegal practice when it comes to stock markets. However, day traders have been using this scheme to make big gains from stock trading.
Reddit and other social media day traders have recently targeted heavily short stocks, including GameStop (NYSE: GME), Express (NYSE: EXPR), Nokia (NYSE: NOK), and BlackBerry (NYSE: BB). They have successfully pushed the share price of these stocks significantly higher without any valuations or fundamental support.
However, these stocks fell back sharply this week as traders have started dumping their positions after stockbrokers, including the most famous Robinhood, placed trading limits on 50 stocks, including GameStop.
Shares of GameStop fell close to 80% this week, while AMC Entertainment (NYSE: AC) stock plunged almost 50% as day traders have started targeting other stocks.
Nokia CEO Pekka Lundmark has also expressed his concerns about a surprising stock price rally.
“It has nothing to do with our business. As a CEO, what can I say? The only thing I can do is focus on my business. It is strange. We are only watching on the sidelines,” Lundmark stated.
The rally in ATA Creativity stock is also supported by emotions and pump and dump schemes from social media traders, which is not sustainable for the long-term.
Shares of ATA Creativity could also crash like GameStop and other stocks once day traders started dumping their positions.