Qualtrics, American Airlines and Dogecoin

It was a busy day yesterday on Wall Street, as the GameStop saga continued and some brokers moved to suspend trading in over a dozen stocks that are being targeted by r/wallstreetbets on Reddit.

This is still leading to major gyrations in some stock prices while traders, brokers and hedge funds participate in some highly charged short squeezes and members of Congress start to pitch into the debate.

Qualtrics toasts massive IPO

It was nice to see an IPO get off to a good stay as Qualtrics International (XM) opened up more than +39.5% on its IPO price. This will be another one to watch on Friday on Wall Street. The IPO in the Utah-based software company was priced at $30 after initial speculation that it would be between $27 and $29 a share.

Qualtrics is a tech stock and there is still plenty of demand of tech-based IPOs. Some controversy on this one as Qualtrics amended its SEC filing after SAP CEO Christian Klein appeared to tout the stock on CNBC Squawk Box Europe, which, given that SAP is the owner of Qualtrics, violates SEC regulations. Part of the investor excitement rotates around its software, which works in the area of experience management – called the XM Platform.

According to the filing by the company – “Our XM Platform helps organizations both design and improve the experiences that turn their customers into fanatics, employees into ambassadors, products into obsessions, and brands into religions.”

The stock is off to a great start, as the IPO values it at $15bn; in November 2018 it raised $400m with an IPO that valued it at $4.3bn; SAP acquired the company for $8bn only days later. We look forward to seeing someone else trying to repeat that feat at this new valuation.

Reddit gang targets AAL stock, Robinhood bans it

American Airlines Group (AAL) was getting plenty of love from day traders yesterday as they tried to shift the price of another company that has been struggling with the pandemic. In this case the so-called Reddit trader mob sought to throw their weight into the stock, pushing it by nearly 10%. Sadly American Airlines is a much, much bigger company than GameStop. Shares in the airline climbed not long after open from $15 to hit close to $17.5.

We may see more buying activity in the stock Friday, but this is a harder one to move. The composition of the investors is different – it has a lot of lazy institutional cash in it that is not going anywhere and is not going to be forced into a sale. This includes a ton of ETF money which are different beasts to hedge funds.

The attraction of AAL is obvious – it is the most shorted airline stock on Wall Street and posted a record annual loss due to the pandemic. Robinhood also moved yesterday to restrict trading in AAL, only allowing traders to close positions, which also messed with the strategy. Again, as we have mentioned elsewhere on this site today, this will have repercussions for Robinhood over the medium term.

Elon Musk gets bored, pumps DOGE

Finally there is Dogecoin. Here again day traders have been in action, this time targeting a cryptocurrency. Dogecoin iss up over 373% and at one point in the last 24 hours as up 613%. In the case of Dogecoin, the currency was targeted by another Reddit forum, this time r/satoshistreetbets, which has set its sights on taking Dogecoin to the moon. US traders have been calling on traders in Indian and Europe to help drive the price after Thursday US market hours.

Dogecoin is also being powered by Elon Musk, who is obviously bored and is randomly tweeting about cryptocurrencies. The market cap of Dogecoin is up at $6.9bn with trading volume up over 2,200% in the past 24 hours which looks completely artificial and ramped up. Again, we are seeing problems with the infrastructure that underpins cryptocurrency trading, with many traders now reporting that they can’t withdraw funds using the DOGE wallet. It is a familiar story.

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