GME: A Pump and Dump Scheme?

Abstract

At the end of January 2021, an important page in financial history was written for the records as a moment in which private investors attacked hedge funds. The operation "headquarter" was Wallstreetbets, a forum of people looking for high return investments and it played a central role in the GME rally. From an economical perspective, the main reason of the exponential increase of the stock price is Short-squeeze; to make it happen, what is need is pressure from the market. This research focused on finding a relationship between activity on the Reddit platform and the change in GME stock price. Many different analysis were used, starting with a Sentiment analysis measuring the similarity beten different NLP dictionaries and verbiage within the Reddit platform. Lastly, a Fama and French model was run to find whether or not, there was an economical reason behind the return amounts for this event. Relevant data was found from all the tests conducted and the result led to believe that this event was a pump and dump scheme.