This is a long story with three key players (pun intended): GameStop or GME (a brick and mortar store that sells video games), r/WallStreetBets (a Reddit community that provides investment advice) and Short Selling (a process that entails selling borrowed stocks hoping that prices would eventually fall and one will end up making a profit)
Due to reduced footfalls in stores during the pandemic, GME’s revenue and share price understandably fell. Several international investors decided to short GME in the hopes of capitalizing on their decline.
What they didn’t account for was a change in leadership, new investment and the beginning of a new console cycle. That, and a Reddit community who noticed that there were 71 million short positions against roughly 20-30 million actively traded stocks and decided to force them into a ‘Short Squeeze’ whereby they bought the stock and held it, forcing the price up.
What followed made a stock that had once been barely $4 hit a peak of almost $495. At the time of writing, the stock is worth $193 and more developments keep occurring, developments like Robinhood’s blocking of retail purchasing of GME’s stock.
The majority views this as Robinhood siding with Wall Street institutions while restricting the freedom of the individual trader. While the media is spinning this as a tale of insane Redditors trying to bring down Wall Street.
But could a Reddit community of amateur armchair traders possibly bring down Wall Street giants? Are they actually as insane as they are made out to be? To learn more, watch this video:
