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Shoppers wait for a GameStop store to open on at the Tysons Corner Center, in Tysons, Virginia, November 27, 2020.
Hannah McKay | Reuters

An army of Reddit traders, triple-digit stock pops and a $100 million deli: In a wild year of trading, the unexpected became the norm in the stock market in 2021.

This year’s activity coincided with a surge of rookie investors who joined the world of stock trading to ride the historic market rebound. Remote work, stimulus checks and higher personal savings levels, as well as social media chatrooms, only accelerated the boom in retail trading.

“If there was ever a doubt about who wields power in the stock market, the U.S. retail investor stole the show in 2021,” Tony Pasquariello, global head of hedge fund coverage at Goldman Sachs, said in a note. ”Following a year that saw more inflows than the prior 25 years combined, to what extent this cohort remains in the fight is a major open question for early 2022.”

Meme stocks shock Wall Street

The meme stock saga started just days into 2021 when retail traders teamed up on Reddit’s WallStreetBets’ forum, aiming to bid up GameStop‘s shares, which were heavily shorted by hedge funds. The retail buying triggered massive short covering among hedge funds that fueled the rally even further.

Trading volume for GameStop and meme stock favorite AMC Entertainment has faded. About 2.5 million shares of GameStop are changing hands daily based on a 30-day average as of Dec. 22, a fifth of that in January, according to FactSet.

Reddit traders also appear less focused on GameStop and AMC, which were the two most-mentioned tickers on WallStreetBets this year, according to data tracker YoloStocks.

WallStreetBets mentions for both peaked on Jan. 28 at about 267,000 for GameStop and 47,000 for AMC, but typical days for each over the past few months see hundreds, not thousands, of mentions.

Despite recent market sell-offs with GameStop and AMC each dipping to their lowest levels in months last week, both stocks are up this year, at about 716% and 1,260%, respectively. 

Performance varies for other stocks popular on Reddit message boards. BlackBerry is up 40% for the year, while Tesla added 48%. Clover Health and Bed Bath & Beyond are down roughly 75% and 13% in 2021.

A $100 million deli

While the meme stock mania turned heads this year, perhaps the weirdest investing phenomenon is the tiny New Jersey deli that once had a market capitalization of more than $100 million.

Hometown International, with its Paulsboro, New Jersey-based Your Hometown Deli being its sole location, notched an eye-popping market value earlier this year amid a trading frenzy. The deli only had $35,748 in sales in the last two years combined, according to securities filings.

Hedge fund manager David Einhorn highlighted this deli as an example of speculative trading activity back then.

“Someone pointed us to Hometown International (HWIN), which owns a single deli in rural New Jersey … HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing,” Einhorn said in a letter to clients in April.

SPAC explosion

2021 was also the year of SPACs.

The funds raised via U.S. special purpose acquisition companies have totaled a record of $162 billion in 2021, doubling the $83.4 billion issuance last year, according to data from SPAC Research.

SPACs raise capital in an initial public offering and use the cash to merge with a private company and take it public, usually within two years.

The market was red hot in the first quarter with new deals recording an average 6.5% first-day jump. Small-time investors represented 46% of trading volume in SPACs on Bank of America’s platform in January.

Now the industry has cooled down amid a multitude of challenges, spanning from regulatory pressure to the prospect of higher interest rates and to the increasingly competitive deal-making environment.

Still, one particular deal launched in the fourth quarter garnered a lot of attention. Digital World Acquisition Corp. announced in October that it is taking former President Donald Trump‘s planned social media platform public. The news sparked a 800% two-day rally in the stock, and the SPAC is still up more than 400% for the year.

Popular investor Chamath Palihapitiya said in October on his podcast “All-In with Chamath, Jason, Sacks & Friedberg” that Digital World Acquisition is “an exchange-traded NFT of Donald Trump.”

Note: FactSet is the data source for the graphics at the top of this story, and the information is current as of market close on Dec. 22.

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