Billionaire Investor Mark Cuban Says Reddit Stock Traders Have ‘Every Right To Kick Wall Street’s Ass’
Billionaire investor Mark Cuban has said Reddit stock traders have every right to kick Wall Street’s ‘old school ass’.
In a new blog post, Cuban criticised an outdated Wall Street that ‘has not changed much in generations’. The result of this is a new wave of traders, who he dubs the ‘Store of Value Generation’, that no longer care what Wall Street thinks, or what it says about valuations.
Last week, Wall Street was up in arms after a group of tech-savvy Reddit users, WallStreetBets, joined forces to increase video game retailer GameStop’s share price tenfold in a matter of weeks.
The group had noticed that hedge fund Melvin Capital had betted against GameStop by short-selling its shares, meaning it stood to gain if GameStop value went down and lose if it went up. Determined to flip the script, Reddit members quickly started to pile into Gamestop so Melvin Capital would be hit by the huge losses, otherwise known as a ‘short squeeze’.
In a blog post defending the group, Cuban said there was no difference between those who follow advice from Reddit or those that get their information from traditional outlets like Bloomberg.
Cuban said the Store of Value generation’s special power was in ‘financial unity’.
‘They know that the more they work together, the less power Wall Street has. They know that fat and happy Wall Street has become slow, stale and set in their ways, which makes them an easier than anyone would expect target,’ Cuban said.
‘As a group, they can target any hedge fund, any stock, any time, for any reason and change the game,’ he said, adding that it was ‘no different than a major Wall Street analyst making a major call’ and moving ‘stock by getting their Whale followers or clients to buy or sell’.
‘Now WallStreetBets and the people who follow it, the collective, can do the same, but with much more power and impact. We as a country will be far better off if we understand them, respect them and learn from them, quickly,’ he added.
He urged his readers not to view this negatively, writing that being able to have an impact on something that is of significance could be ‘amazing and great’ for the US.
‘It can be absolutely positive. Push up the stock of a company that has a strong social mission they support. Push up the stock of a company that offers equity to their employees at the lowest levels so they can sell into the market and gain wealth,’ he said as examples.
‘However, this is exactly what Wall Street hates and will fight because it moves the power out of their hands,’ he added.
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CreditsThe Mark Cuban Weblog
The Mark Cuban Weblog