It is said, these days, that stocks only go up. That IPOs are can’t-miss opportunities—indeed so much so that the tyrannical hold over them by institutional investors must be broken by a legion of SPACs.
It is also said, by Dave Portnoy, that Dave Portnoy is the greatest stock trader of all time, and that all things the Barstool Sports founder touches in the markets will all but literally turn to gold.
“They showed me their algorithm. I said, ‘This is brilliant, of course it will work,’” Mr. Portnoy said in the video. “Twitter, social media, all of it is dictating stock prices.”
That “brilliant algorithm” is the engine behind the VanEck Sectors Social Sentiment exchange-traded fund, BUZZ to its friends and the Nasdaq. The new ETF aims to give casual followers of r/WallStreetBets degenerates a one-stop shop for all the stonks soaring to the moon on the back of social-media buzz. Unlike the brave new world of stock investing the bored day-trading hordes have unleashed, however, this is an ETF, and there are rules, and that means in the sort of fast-moving markets powered by, well, buzz, you’re probably not getting what you think you are getting, incandescent brilliance of the algorithm notwithstanding.
The ETF has 75 stocks within it, but the videogame retailer and shares of some other companies at the epicenter of the recent Reddit-trading frenzy aren’t included…. Companies that trade on major U.S. exchanges and have market values of at least $5 billion are the initial hurdles for entry, and one GameStop failed to meet as of the index’s last quarterly rebalance on Jan. 1…. GameStop’s market cap was $9.2 billion on Thursday and rose as high as $22.7 billion in late January.
And all of the buzz and blustering from Portnoy couldn’t save BUZZ from some inauspicious timing, specifically the moment at which a basket of stocks that were hot around Christmas chose to go public. Of course, like his spirit animal president, El Presidente is not one to let the facts get in the way of a good story and some shameless self-promotion.
That assortment of stocks proved vulnerable to the market’s ongoing pullback…. Stocks across the market registered further losses on Thursday as that shift continued. The ETF fell 3.6% in its trading debut, worse than the S&P 500’s 1.3% slide….
“If you don’t think what is happening with $BUZZ right now doesn’t show the power of me and Barstool, I don’t know what to tell you,” Mr. Portnoy tweeted, adding, “*I am not a financial advisor.”
You don’t say.
BUZZ, the ETF of Social-Media Darlings, Drops in Trading Debut [WSJ]