Last week, my roommate walked into our living room and handed me her phone. Illuminated on the screen was an article by the Washington Post that read, “GameStop, AMC shares surge after Reddit users lead chaotic revolt against big Wall Street funds.”
Naturally, as someone who lets all things related to the economy go over my head, I was confused how Reddit could have any impact, and my roommate tossed around big terms I wasn’t quite familiar with. I’d never fully grasped the concept of the stock market. As I started to put the absurd pieces together, it was obvious that something momentous was happening, and that this was a story of the little guy versus Wall Street.
On a subreddit called “r/WallStreetBets,” the average day used to consist of everyday traders discussing their major successes or sickening losses, often using the “Robinhood” trading app to buy and sell stocks due to Robinhood’s low costs.
On Jan. 26, a group called “short sellers,” who anticipate companies’ failures and quickly borrow then sell stocks to capitalize off of this assumption, announced a decision to short sell their stocks on GameStop.
Members of r/WallStreetBets, already having valued GameStop for its potential rather than its failures, used this information to invest in GameStop stock. They rallied behind the cry of buying these stocks and holding them from the short sellers, thereby causing immense financial damage to hedge funds, groups of investors who pool their money and employ different high risk strategies to make money.
Their risks worked at first glance. GameStop’s stock price skyrocketed, and Wall Street analysts panicked, many coming out with statements that the events were unfair and claiming that their families were receiving threats.
Meanwhile, the average traders on Reddit began gaining support from outsiders wanting to cash in. There was more of a demand than there was a supply of stocks, and companies like Blackberry and AMC were pulled in. The subreddit was swarmed with memes celebrating the situation or promoting the buying and holding of stocks. Scrolling through could take you from one Spongebob meme about their successes that day, to an essay of information about next steps.
As financial experts argued on news outlets about the validity of what was happening, the success of the little guy seemed clear. That lasted until apps like Robinhood began targeting the companies that Redditers were investing in and stopping all buying of stocks, while hedge funds could still trade and profit freely.
The victims, once again, were the everyday people, while the rich and powerful halted the free purchase of stocks to benefit themselves. Although many Redditers still hold their stocks and encourage others to do the same, many sold their own back to short sellers in the frenzy.
Politicians, financial experts, celebrities, YouTubers and Redditers alike have expressed their varied opinions on the situation.
Representative Alexandria Ocasio-Cortez tweeted “it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino,” and, in a surprising twist, Ted Cruz concurred with the sentiment in a separate tweet that stated “Fully agree.”
While those opposing the subreddit’s methods urge change to stop this from happening again, r/WallStreetBets continues to cling to their position and determine their plans in the ever-evolving chaos.
