Reddit co-founder Alexis Ohanian told CNBC on Thursday that the meme stock frenzy — which traces its roots to the online forum website he helped create — is what happens when momentum investing is amplified by technology.
“Really, the existence of people getting whipped up and excited about a stock has happened, you know, it’s happened around barbershops. It’s happened around bars,” Ohanian said in an interview on “Squawk Box.” “Retail investors have just never been able to jump on an opportunity in real time, and this is what it’s like in the age of ubiquitous social media.”
“Meme stocks, it is a charming name, but I think at the end of the day, momentum investing is nothing new,” added Ohanian, who in 2005 co-founded Reddit alongside current CEO Steve Huffman. Ohanian, now a venture capitalist, stepped down from Reddit’s board in June 2020.
The spotlight on various meme stocks has brightened in recent weeks, months after the saga first captured Wall Street’s attention in January with GameStop as the most prominent example. Stocks that have recently been touted on Reddit message boards and seen their prices soar, at least temporarily, include AMC Entertainment, Clover Health, and Clean Energy Fuels.
Ohanian acknowledged professional investors are also jumping in on the action, echoing comments Wednesday from the CEO of market maker Virtu Financial, Doug Cifu, who told CNBC that “this is not solely a band of retail traders trading these stocks.”
Even so, Ohanian said greater involvement in the markets from individual investors is a long-term positive — even though there’s risk. “We absolutely need more financial literacy … but the thing we have to keep in mind is, this is here to stay,” he said.
“We’ve crossed Rubicon, and it doesn’t matter one platform or another, this is how people are sharing content. They’re able to open an app and execute a trade and it’s only going to get easier,” Ohanian added. “It’s only going to get more normal for a generation coming up with this. They’re not even going to conceive of the idea of calling a stock broker or, for a lot of folks, hiring a professional.”