r/WallStreetBets and the Stock Market

 Introduction

Last week, we saw 'Wallstreetbets', a community of investors shake the stock market by purchasing shares from failing US companies, forcing the share price to rocket. The community collaborated on the online message board site Reddit before simultaneously purchasing stocks from companies such as Gamestop, Nokia and Blackberry on the brink of liquidation, causing the share price to increase. 

Meanwhile, experienced stock market traders were losing significant amounts of money as they had effectively been betting that these companies would collapse. These investors were using a trading method called 'shorting'. 

The Reddit community have taken the stance that short selling is immoral and should not be permitted and found that boosting the share price of particular companies by purchasing shares in an organised time frame, the short sellers would not be able to profit, and in fact have to pay for the share price increase, potentially bankrupting some investors. This market strategy is known as a "short squeeze".

What is Shorting?

Shorting or short-selling is a method that investors use to bet on a companies share price will fall. Investors will borrow shares from a broker to sell in the market and if the price drops, they buy the shares back and keep the difference in price. On the contrary, if the share price increases, the investor must pay the difference in price. 

What does this mean?
As the share price sky rocketed, due to the demand of the likeminded investors purchasing the shares of the companies that experienced traders were convinced that the share price would drop, these investors are now required to pay the difference as required under the conditions of short selling.
This has publicised the short selling methodology and has raised ethical concerns as to how people should be permitted to profit from a company failing. The effects that this has had on the US Stock Market is likely to trigger an investigation or change of practices as a response.

Should we be worried?
Unless you are short selling, the simple answer is no. Not yet. These is some evidence to say that the events from the United States of America are being mimicked in the United Kingdom with some companies such as Cineworld but the 24% gain is little in comparison to Gamestop. Investors may want to consider creating limit orders to protect their investments as the market is likely to change rapidly should this offensive attack on short sellers become practiced on the UK stock market. Sell out at a price your happy with rather than being greedy and getting caught on the downward trend.

Automatic purchases and sells appear to continue to be processed even if the trading platform ceases activity due to the rapid changes. 

What happens next?
The primary targets for Monday 1st February 2021 appear to be AMC Entertainment Holdings Limited (NYSE:AMC), Gamestop Corp (NYSE:GME), Nokia Oyj (NYSE:NOK) and Blackberry (NYSE:BB) but the list is extensive. The Wallstreetbets group are also targeting the price of silver as it is believed that price of gold and silver is being manipulated to cover the real rate of inflation.

With the rush on purchasing shares in AMC Entertainment Holdings, there is a chance that Amur Minerals will see a spare price increase due to the similar abbreviations (NYSE:AMC) vs (LON:AMC) causing some confusion.
The potential UK companies that have been mentioned are Cineworld (LON:CINE), other likely candidates are those that have suffered harshly due to the COVID-19 pandemic and enforced closures of businesses to reduce the spread of the virus. 

Eddie Stobart Logistics Plc

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What to expect in the Stock Market over the next few weeks

The stock market was the centre of mass media coverage last week with GameStop shares frenzy. We at Bull & Bear strongly believe that this coverage has encouraged a mass of new, keen investors into the stock market. For the honest and willing new investors, we welcome you. But the actions and the media coverage have also disrupted the normal trends and trust that a stock market required in order to gain momentum. We were all reminded as to how volatile and unpredictable stock trading can be.

Almost all of our watchlist suffered losses and we hope that, as the dust begins to settle, trust can be restored and our shares can once again increase to their rightful value. What we can expect is a thorough investigation into the morality of short-selling and potentially changes made to the trading market as we know it. 

New Investors may benefit from Bull and Bear Invest Channel's 'Understanding the Stock Market' tuition videos that are in production and being uploaded to our YouTube Channel. Be sure to subscribe so that you don't miss a thing!

Here are a few highlights from our watchlist that would like to share with you:

 Eurasia Mining PLC (LON:EUA)

Eurasia took a nose dive to £0.15p on Wednesday 27th January 2021 as Alexei Churakov sold 27,400,000 ordinary shares to 'cover an urgent and critical cash call'. Eurasia managed to creep back up and settle at £0.24 to end the week. 

Eurasia confirm that the Company and the team of professional advisors continue to work on the Formal Sale Process and the operations are ongoing with the DFS for West Kytlim which was recently approved on 21st January 2021. 

The development of the sale of Eurasia Mining has been kept secret due to a non-disclosure order which has made it incredibly difficult to obtain facts, resulting in a multitude of rumours that cannot be fully substantiated, but we all hope that sale is concluded sometime soon and for the respective appropriate price.

Thor Mining (LON:THR)

Thor Mining have published the Quarterly Report October - December 2020 and it makes a very interesting read. They have also highlighted the next steps they expect to conclude in Q1 of 2021. Thor is expected to be releasing a large quantity of updates during Q1 regarding the drilling programmes, ISR test work and securing project investments. 

Bull & Bear's presentation on Thor Mining explains the concept of In Situ Recovery and the benefits it has in comparison to the standard mining methods. 

Rambler Mining & Metals (LON:RMM)

Rambler closed the week at a low £0.335 despite the Copper Production Results issued on 26th January 2021. Rambler boasts about being able to remain operational during the COVID-19 pandemic due to robust measures in place to identify and manage any occurrences of infection.

Rambler have been very quiet recently on the news front but we are yet to see confirmation that the proposed transaction involving the sale of the Nugget Pond Gold Plant is concluded. We are expecting this to be concluded during Q1 of 2021. The sale of the Nugget Pond Gold Plant will provide Rambler with US$2.0m cash and C£0.5m in common shares of Maritime Resources Corp.

Argo Blockchain LTD (LON:ARB)

Argo Blockchain announced that 1295 new mining machines were in production on Friday 29th January 2021. The RNS expressed the Company's intentions and a further 10,000 new machines are on order and are expected to be delivered during Q1 and Q2 of 2021. 
Collectively, these additional machines will raise Argo Blockchain's mining power to 1,685 petahash!
Bitcoin saw a brief 16.14% increase on Friday and this can only mean good news for the company who are mining it!

We are keen to see the developments with Argo Blockchain as the year continues.

Eddie Stobart Logistics Plc (LON:ESL)

We are awaiting the time that Eddie Stobart Logistics Plc is renamed to "Logistics Development Group Plc" We know that this is expected to happen before February 28th 2021. This move is to represent a change in business strategy and delineate from the Eddie Stobart business. We are expecting this change to be represented in the media with mass coverage. 

I would expect Logistics Development Group to use this opportunity to announce further business opportunities and strategies in order to create firm foundations for the renamed Company to progress forward.

Not to be confused with Stobart Group (LON:STOB) who are also changing their name to "Eskew Limited", as we understand, for a similar reason. 

Bull & Bear Invest Channel are not liable for any losses incurred for actions taken based on the content written. Although the greatest care is given to ensure that accurate data is provided, you must always conduct your own research when investing. 

1.1 A Beginners Guide to the Stock Market

 Bull and Bear Invest Channel have put together a Beginners Guide to the Stock Market as an introduction to a 'Understanding the Stock Market' series of coaching videos. 

This guide explains some key differences, introduces the stock market and some important details that should be taken into account before starting your investing journey. 

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Argo Blockchain Plc

 Bull & Bear Invest explain the concept of Bitcoin mining as we look at the future prospects of Argo Blockchain Plc

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Amur Minerals

 

Bull and Bear take a quick look into pending news materialising with Amur Mineral (AMC)

The highlights:
We are awaiting confirmation that the Bankable Feasibility Study (Aka Definitive Feasibility Study) to be submitted. Further work is required prior to submission, however Amur Minerals intends on having this completed during Q1 of 2021.

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Eurasia's share price recovery & sale update

 As we were expecting, an RNS landed at 07:00 this morning from Eurasia Mining Plc regarding the "adverse movement in the Company's share price." 

They confirm that the RNS that disturbed a countless number of investors was reported by Alexei Churokov himself. Eurasia had received no notification of the the trade prior to this RNS being released. 

Eurasia confirm that they remain focused and continue to work on the Formal Sale Process and that the operations of the company are still ongoing with the Definitive Feasibility Study for West Kytlim which was formally approved on 21st January 2021.

It is the understanding that the sale of these shares were to cover an urgent and critical cash call and that all the shares sold were acquired by Veles International. 

Alexei has no intentions to sell him remaining shares and/or options at this time.

Who are Veles International?
Veles Capital is one of the oldest Russian privately held investment companies providing financial services and access to Russian financial markets, private equity and real estate investing to corporate and high net worth individual investors.

What we now know

We now understand that the sale of the 27,400,00 ordinary shares was not attributed to the sale process of Eurasia Mining Plc. 
The investors who rightly or wrongly assumed that the sale negotiations had collapsed can now rest assured that this is not the case. 

On the plus side, the news that shock the investor community has generated plenty of online activity which could encourage additional buyers, potentially raising the share price above the £0.30 area of which we have been holding steady since the 5th January 2021.

At the time of publishing this post, the SP increased 50% to £0.27 from the start of the trading day.