It’s not just AMC. Retailers increase the appeal of the stock market.

They have pushed up the stock prices of companies ranging from GameStop Corp.

GME 0.28%

to AMC Entertainment Holdings Inc.

AMC 10.06%

both have gained over 1,000% and 2,700% respectively this year. They have made the cryptocurrency dogecoin, originally created as a joke, soar. And they have banded together in brash forums to inflict punitive losses on institutional investors.

Here are four ways individual investors continue to shape every corner of the US market.

Their trading volume continues to grow.

For years, the trading activity of individual investors rarely made a splash on Wall Street. That started to change in 2019, when online brokers moved en masse to commission-free trading. The Covid-19 pandemic further accelerated individuals’ interest in stocks last year, allowing those stuck at home to try and trade through historic market volatility.

Together, these forces helped individual investors’ share of the trading volume of U.S. stocks reach 20% last year, about double from a decade earlier, according to data from Larry Tabb, head of market structure research at Bloomberg Intelligence.

That share is growing this year. In January, as individuals piled into so-called meme stocks, retail investor activity accounted for 26% of all stocks traded in the U.S. stock market, with some online brokers themselves accounting for a significant portion of the total trading volume. . The activity of individual investors trading on Robinhood Markets Inc. accounted for about 4% of total US trading volume in January, estimates Mr. Tabb, while E*Trade’s financial activity was 2.4%. Its figures exclude trading activities of electronic trading companies executing transactions of individual investors.

Those numbers have fallen slightly since January, but Mr Tabb expects the high activity levels of individual investors to continue.

They definitely have influence, and they’re not going away, he said. We think that for the coming year 18% to 22% of the market will be driven by retail.

Long regarded as dumb money, Wall Street has in recent months attracted the attention of everyone from hedge fund managers to chief executives to regulators. One reason why: they have real money behind their moves.

On a net basis, individual investors have netted $140.57 billion into the U.S. stock market this year, according to data through Monday from Vanda Researchs VandaTrack. That’s about 33% more than in the same period a year ago, and more than six times as much during the same period in 2019.

They tend to go in and out of trends quickly.

It is no surprise that individual investors enter into certain trades with force take, for example GameStop in January. The stock rose to $483 on Jan. 28, a jump of about 643% in the span of four trading days from its closing price on Jan. 22.

Thanks to the ubiquity of social media, individual investors tend to trade together, whether for individual stocks or broad sector themes, and strike quickly to drive the price up within hours or days. Almost as quickly, data shows, individual investors pull out of those trades and move on to the next.

Take, for example, a basket of meme stocks that feature prominently on the Reddits WallStreetBets platform. Data from VandaTrack shows investors landed in the basket with companies like GameStop, AMC and BlackBerry Ltd.

quickly in January, before trading was largely halted just three weeks later.

The influx into the basket has increased again in recent weeks, but already, data shows, the tide is turning. The price of the basket has fallen 17% in the past week, Vanda Research said in a note Wednesday morning, as flow to the stock also began to slow.

This changes the way you may trade in these spaces. Gone are the days when you can buy and hold a small cap name and hope it will yield 50% over time. It does that almost in a matter of days now, said Viraj Patel, global macro strategist for Vanda Research. Market timing is the app trader’s best friend in this space.

The activity of individual investors is causing shortsellers to withdraw their bets on meme stocks.

The meteoric rise of GameStop earlier this year spotlighted the practice of short selling, or when an investor bets against a company by borrowing shares and selling them in the hopes that they can be bought back at a lower price. Individual investors focused on GameStop in January due to the increased level of short-selling relative to the stock.

In what has now been cast as a modern day David and Goliath, individual investors were able to inflict large losses on short sellers as GameStops stock price moved higher, forcing the bearish investors to buy back shares to cut their losses. Some investors have significantly reduced their short positions.

Short-term interest rates have fallen sharply at individual companies. GameStops short-term interest rates are currently hovering around 21%, compared to over 100% last year and the start of meme stock trading in January, according to Dow Jones Market Data. Several other meme stocks popular on social media have seen short-term interest rates drop significantly.

More trading is taking place outside of exchanges.

The increase in activity among individual investors corresponds to more trading on public exchanges, also known as dark trading.

When an individual investor places a trade on an online brokerage platform, that trade is typically forwarded to electronic trading companies such as Citadel Securities and Virtu Financial Inc. These companies usually execute the orders privately instead of, for example, on the New York Stock Exchange.

Online brokers and electronic trading companies often say that the practice benefits retail investors by executing their trades at slightly better prices than they would get elsewhere. Still, the practice has received increasing attention this year, in part due to the lack of transparency surrounding the transactions.

In January, US market trading volume via exchanges rose to a record 47%, data from Rosenblatt Securities shows.

And for individual stocks, the figure can be even higher. In a recent note, Rosenblatt said nearly 80% of trade in Sundial Growers Inc.

SNDL -2.98%

happened at exchanges in May. For AMC that was 57%.

There were many days in December and January when off-exchange trading made up more than 50% of total volume, said Justin Schack, a partner at Rosenblatt.

Write to Caitlin McCabe at [email protected]