Over the years, Reddit has become the ultimate hub for stock market buzz, sparking countless discussions and debates that drive hype around trending stocks. Many companies have seen share prices skyrocket or plummet thanks to the momentum of Reddit’s massive community. The rising star in the quantum computing space, Rigetti Computing, is the latest example of this phenomenon.
According to data presented by Altindex.com, Reddit hype powered Rigetti Computing’s remarkable 555% stock rally in a single month. But as the hype began to wane in the last week, the stock plummeted by 55%, highlighting the volatility of Reddit-fueled trading.
The “Pump and Dump” Power of Reddit
The alternative data platform AltIndex monitors unconventional data sources like social media sentiment, Reddit mentions, Google trends, customer reviews, job postings, and more, helping investors stay ahead of market trends and make smarter stock picks.
At the beginning of December, the platform noticed a significant spike in Reddit mentions for Rigetti Computing and its stock RGTI. With quantum computing stocks gaining traction on investing subreddits, Rigetti quickly became one of the most discussed stocks.
The bullish sentiment among Reddit investors was followed by a sharp rise in the stock price, soaring by over 200% within a matter of days. With the Reddit crowd hyping up the potential of quantum computing, RGTI stock climbed an incredible 555% by the end of the month.
Although RGTI Reddit mentions remained steady in the following days, the social media sentiment started to wane, followed by a 55% price drop in a single week. This huge drop highlights the influence of Reddit-driven trading, which likely contributed to this pump-and-dump” effect.
Alternative Data Lowers the Risks of Reddit-Driven Stock Movements
In recent years, many stocks have seen their prices skyrocket or plummet, fueled by Reddit buzz. In 2024, this phenomenon reached new heights, with Reddit investors striking gold. According to AltIndex analysis, eight out of ten top-discussed Reddit stocks, including GameStop, Nvidia, Tesla, Google, Apple, Robinhood, Amazon, and Meta, hit an average year-over-year return of 59%, doubling the S&P 500’s growth.
Still, Rigetti Computing’s rollercoaster month is a good example that investing only on Reddit-driven trends without the real-time insights can be risky. By using alternative data and analyzing trends in real-time, investors can better recognize potential opportunities and risks, before they show in the market.
