Virtu Financial CEO says the meme stock craze isn’t just being fueled by “a gang of retailers”
The hectic activity surrounding so-called meme stocks is not only being driven by private investors, the CEO of market maker Virtu Financial told CNBC on Wednesday.
“There are many institutions, professional traders, speculators, whatever you want to call them, dealing with both the cash market and the options market,” said Virtu’s Doug Cifu at Power Lunch. “This isn’t just a group of retailers trading these stocks,” he added.
Cifu’s comments come as the spotlight has returned on meme stocks popular on online forums like Reddit. While the saga started in January and GameStop was the most prominent example at the time, retailers have expanded their focus to other stocks.
AMC Entertainment has been a favorite on Reddit boards lately and recently, Clover Health and Clean Energy Fuels have drawn attention.
Clover Health jumped more than 140% into Wednesday’s session so far this week alone. However, despite an initial pop early in the trading day, Clover Health closed 23.6%.
Clean Energy Fuels rose more than 30% on Wednesday.
Reddit traders have searched for stocks with significant short positions, buying stocks and call options to drive the price higher.
“You do everything. … you have to try to figure out which one is next, “CNBC’s Jim Cramer said Wednesday, comparing the craze for meme stocks to gambling, not just investing.
Cifu also co-founded Virtu in 2008, and the New York-based financial firm has grown to become one of the world’s largest market makers who play a vital role in executing stock trades.
“We have two sides of our business. We have a retail store and an institutional store. It shouldn’t get past people: this isn’t just a retail phenomenon,” said Cifu, referring to the Meme stocks.
“We want to make sure there are appropriate appropriate ones, that people actually know what they are doing and that they have full transparency,” he added. “But otherwise, that’s what the markets are for, and they work pretty well.”