Ok, even if you think the stock exchange is a place to exchange stockings, it’s very likely that you’ve realized there is something noteworthy going on these days. We want to shed some light on the current war between Wall Street and the nerd community.
It all started with the GameStop shops. The video game chain has been struggling for years as online sale platforms have more and more gained control over the market and the pandemic seemed to be the coffin nail to it. Basically the end of GameStop was a done deal, except that in the last days, GameStop’s stock has soared to unbelievable heights. Just hours later the shares fell more than 60% after some brokers imposed trading limits on the stock. What happened?
As many struggling firms, GameStop became the focus point of a trading strategy known as short selling: Big Investment firms expect the company’s shares to lose value. Hedge funds then borrow GameStop shares from lenders (at a small fee), promising them to give all back. The firm sells the stocks at their current price, then waits for their price to sink, so they can repurchase them for cheaper and earn a profit. It is a morally controversial and risky maneuver but in terms of GameStop it seemed to be profitable for the deep-pocketed hedge funds.
This is when the Reddit forum „Wall Street Bets“ hit the dance floor. The community currently consists of more than 4 million members; they understand how the systems works and they know how to network! By buying as many shares as possible, the crowd of small investors coming from different online platforms increased the share price! And when the stock started rising, short sellers had to buy the stock as well to avoid greater losses. Which obviously caused the stock price to rise even further! All of this led to a market phenomenon known as a short squeeze as the short sellers are then forced to buy the stock back at the higher price.
It didn’t take long before independent investors as tech mogul Elon Musk joined the party and just by sending a couple of tweets put another spin to the developments. GameStop’s price went skyrocketing, causing hedge fund Melving Capital to suffer heavy losses. But all that excitement stalled on January 28, when popular brokers Robinhood and TD Ameritrade all of a sudden issued trading restrictions on GameStop.
This in turn caught the attention of celebrities and politicians, who accused the brokerage of keeping smaller investors out of the game while hedge funds were still free to act. Strangely enough, a lot of usually incompatible parties seem to agree on this subject for a change. We have collected the best tweets about the phenomenon for you.
can’t wait to explain this week to my therapist
— Reddit (@reddit) January 28, 2021
why do billionaires care if they lose all their money? they’ll just make it back with their superhuman work ethic, right?
— soup_ (@ambient_soup) January 29, 2021
I know this GameStop stuff is funny, but you have to remember this is hurting real people who own multiple boats
— Kevin Farzad (@KevinFarzad) January 27, 2021
how u gonna be called robinhood then shutdown when robin hood shit starts happening
— zaytoven ibrahimović (@paulycristo) January 28, 2021
manipulating the stock market https://t.co/aikIJVTmn8
— Dan Price (@DanPriceSeattle) January 28, 2021
Hey guys if you like the idea of regular people banding together to fight the rich and powerful then wait till you find out about this thing called „unionizing“
— The New Fill Werrell (@TheEpicDept) January 28, 2021
never in my 3 days of trading have I ever seen anything like this
— Sean Murray (@NoMansSky) January 28, 2021
Rich People: wHy dOn’T tHe pOoR jUsT iNvEsT tHeIr mOnEy
Poor People: Ok.
Rich People: …
Rich People: wait stop
— Justin McDaniel 🏳️🌈 (@JUSTINtime4aLAF) January 28, 2021
So let me get this straight: Redditors rallying GameStop is market manipulation, but hedge fund billionaires shorting a stock is just an investment strategy?
— Robert Reich (@RBReich) January 28, 2021
They shut down that Stocks subreddit in 72 hours. But let them plan the January 6th insurrection on that same app in broad daylight? I got that right??
— Openly 6LACK (@TheHusayn) January 28, 2021
invisible hand of the market looking visible as fuck today
— 🍐 (@telushk) January 28, 2021
I don’t ever want to hear “poor people need to learn financial literacy, learn how to save and invest” again in my life. The past 48hrs has proven that’s a lie, the market is fake, and the game is rigged.
— AshleyStevens (@The_Acumen) January 28, 2021
You know it’s been a WILD day when AOC, Ted Cruz, Donald Trump Jr. and Dave Portnoy all agree on something. pic.twitter.com/u7U8zf4klD
— elijah newsome (@Elijah_Newsome) January 28, 2021
My whole timeline is stock crashes and strip teases, the roaring 20’s are back.
— DON (@juliankeaun) January 28, 2021
Now seems like a good time to remind you that a measly 0.1% tax on Wall Street trades would raise $777,000,000,000 over a decade.
— Public Citizen (@Public_Citizen) January 28, 2021
Hearing the sound of millions of people learning that „capitalism“ means „an economy controlled by whoever already has capital“ not „free markets“
— adam (@govmikeyd) January 28, 2021
GameStop united the country at a time when nothing else could.
— WSB Chairman (@WSBChairman) January 28, 2021
a normal person explains what’s happening on the stock market: pic.twitter.com/zKKvULCirX
— Avalon Penrose (@avalonpenrose) January 27, 2021