Reddit Mob Is Trolling Wall Street By Pushing Up GameStop’s Stock Price
GameStop has had a surprise increase in its stock price. Instead of this skyrocketing value being fuelled by Wall Street, it’s actually being caused by Reddit users.
The stock market can often look too complex to play around with, but Reddit users have mastered the art and have waged a truly random war with Wall Street. Reddit users have managed to play Wall Street at its own game by investing in stocks that were expected to go down in the value. So far, this has led to a $5 billion loss for investors and attention from big names.
GameStop has had a rough couple of years as a electronics retailer for several reasons, including diminishing physical sales. With that in mind, many investors purchased short stock that allows them to essentially lease stock for a period of time and then repurchase them to give back to the company. Short stock investments are a bet that the company will decline in value while the stock is leased elsewhere.
This gamble from investors has backfired massively, as Microsoft, Reddit and Elon Musk have intervened. In October, Microsoft announced a partnership with the company, which saw its stock rise. Meanwhile, the subreddit WallStreetBets saw an opportunity to make some money.
Industry analyst and consultant Michael Futter explained to PC Gamer why Reddit users became invested in this project:
The WallStreetBets subreddit (largely daytraders) decided to mess with them and make some quick money.
They aren’t interested in GameStop as a company. It could quite literally have been ANY company.
Shares in GameStop are now at an all-time high, and Business Insider has reported that short stock sellers have lost $5 billion in this month alone. The movement, which has an air of rebellion, even caught the attention of Elon Musk, who encouraged the Reddit-based traders. Musk is widely considered an influencer of the stock market after the success of Signal and his own companies, and this seems to be the case again here.
The rebellious nature of this investment movement was summarised by Reddit user benaffleks, who wrote a popular message on the WallStreetBets forum:
Remember that scene from the Sopranos, where Tony’s wife calls to buy 5000 shares of Webonics, after she was manipulated emotionally to so? Institutions and hedge funds want us to be stuck in that world.
They’re scared of the future. They’re scared because, so much information is available for free now. There’s no more fees for trading. We have large communities that discuss stocks and trading openly. We can think and make decisions for ourselves, which scares the F*CK out of old school institutions and hedge funds.
It seems that people are keen to take the power back, even if it is through a chain of gaming stores. It will be interesting to see how these groups impact the stock market in the future, and how GameStop will maintain its newfound value.
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