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Barclay’s Analysts Bet Tesla Stock Is Being Propped Up By r/WallStreetBets
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Tom McKay
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The Tesla Gigafactory Berlin-Brandenburg under construction on Feb. 21, 2021 in Germany.
The Tesla Gigafactory Berlin-Brandenburg under construction on Feb. 21, 2021 in Germany.
Photo: Sean Gallup (Getty Images)

Tesla might be the beneficiary of the GameStonks effect, at least according to analysts for the British bank and investment firm Barclay’s.

CNBC reported that Barclay’s told clients in a note on Tuesday that Tesla shares—which hit a peak of nearly $900 a share in January and are now hovering around $680—appear to be at least somewhat correlated with mentions on r/WallStreetBets, the Reddit board which sparked off a massive short squeeze on GameStop and other struggling companies last month. It’s not exactly news that many investors think Tesla may be overvalued or that it might be the result of CEO Elon Musk’s extremely online cult of personality, but Tesla fans have been particularly aggressive about labeling any negative press regarding the company as the work of short sellers seeking to undermine its success. Barclay’s found a “statistically significant relationship” between the number of Wall Streets Bets posts that mentioned “$TSLA” or “TSLA” and the subsequent price of the automaker’s stock.

“On the autos team, we have painfully learned that social media memes can matter more for TSLA share performance than actual financial metrics, fundamentals or (dare we say) valuation,” Barclay’s analysts wrote, according to CNBC. “There is a positive correlation between the number of WSB [WallStreetBets] submissions exclusively citing TSLA, and the performance of the stock.”

From CNBC:

The analysts looked at the correlation between the total number of posts mentioning Tesla and its stock return, as well as the relationship between changes in post count and returns. They found that each has a “statistically significant relationship.”

Barclays said that tracking changes in total post counts about Tesla from day to day is the more “valid statistical test.” Analysts led by Ryan Preclaw noted an increase of seven or more submissions from one day to the next has been predictive of outsized returns for Tesla shares on the third day.

Tesla stock has slumped in recent days, which Barclay’s noted was correlated with fewer posts mentioning $TSLA or TSLA on r/WallStreetBets. However, this could probably be explained as having more to do with other factors like increased competition, the halt of Model Y sales, and Musk’s curious decision to bet a huge amount of Tesla’s money on notoriously unstable Bitcoin (which also took a dive today.) The investment bank’s analysts also wrote that the findings relied on a small sample size and whatever may be going on is “simply such a new phenomenon that there isn’t enough proper history to gain full confidence that it will behave similarly in the future as it has in the past,” according to CNBC.

The focus on the role of organized Redditors in the GameStop trading surge has somewhat obscured the fact that traditional Wall Street elites also got clued into the action and helped pump the video game retailer’s stock for massive profits. r/WallStreetBet’s defenders have argued that they are legitimate, passionate investors rather than market manipulators and that the controversy over the subreddit is a reactionary backlash against little guys (well, some of them) turning a big profit for once.

The Securities and Exchange Commission has issued vague warnings to everyone involved without taking any action, while one of the more prominent r/WallStreetBets users, YouTube’s “Roaring Kitty”/Reddit’s “DeepFuckingValue”, is facing a proposed class action lawsuit. Hearings in Congress last week largely focused on the role of stock trading app Robinhood in the GameStop short squeeze—and whether it screwed over its customers by halting trading in affected stocks—rather than Reddit.
Gizmodo

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