War on Wall Street

“Reddit seizes control of the stock market by investing in GameStop and waging a war on Wall Street”

CNN

“Reddit seizes control of the stock market by investing in GameStop and waging a war on Wall Street”

Emily Baird , Staff Writer

Reddit has begun a war on Wall Street titans in an attempt to “stick it to the man.” With the rise and fall of vintage stocks like GameStop (GME) and AMC Theatres (AMC), people ponder how far it could possibly go.

By now, most people are aware of the GameStop stock phenomenon. Since the beginning of 2021, the value of GameStop has risen by 1400%. What is happening?

To understand the stock market struggle, one must be familiar with short selling. Short selling is a risky investment strategy where one borrows securities from a stock, sells them at the current price, and hopes the prices drop so that the borrowed shares can then be sold at a higher price.

Short sellers are not popular in the stock world. Profiting off of the demise of a business has since come across as an unfavorable practice. When users heard that GameStop was at the mercy of short sellers, they decided to step in. To combat these shady sellers, vintage stocks such as Nokia and AMC skyrocketed.

“I do not think that GME itself is going to go up past the highest it got, but it might get close. Short sellers lost near 100 billion dollars in the span of a few weeks, so I think that GME stock might rise for a little while, but they will probably still be trying to make money off dying companies like they have for years,” senior Max Mullenschlader said.

When Robinhood, a popular trading app, limited GME shares on January 28, the stock price plummeted from 413 to 126. The internet erupted in response to the restrictions, and people from both sides of the political spectrum banded together to preserve the free market. Robinhood brought back the shares, but only allowed a limited amount a user could buy.

This outrage sparked the thought of what a “free market” truly means. When trading is stifled, a stock’s price will obviously fall. Reddit, however, caught on and fought back.

The Reddit forum w/WallStreetBets is responsible for the chaos, as their strength is in numbers. Even as professionals urge them to sell, they hold their stocks in order to “reach the moon.” Even with serious losses, users continue to hold.

While the endgame of many users is unclear, no one truly knows when this GameStop game will stop. One thing’s for sure though: this new idea of a “free market” could change the stock market forever.