GMC to The Moon: The Rise and Fall of WallStreetsBets (A Summary)
February 24, 2021
Throughout the month of January, we saw the rise and fall of what was the biggest take over of the stockmarket (legally) in history. Game Stop, almost an irrelevant company, went upwards of three-hundred dollars in value. How did this happen is a valid question to ask. The answer resides in WallStreetBets.
For starters, this rise did not just happen overnight. Back in September 2019, a Reddit user would post a picture of himself buying 50,000 dollars worth of stock in game stock. He cited the company being undervalued as the reason he bought the stock. He would post videos on his youtube and post frequent updates about his stock that would generate some hype for the stock. Over time, as the hype would rise, so would the number of Redditors buying stock. This would end up resulting in the WallStreetBets community coming into contact with the vultures of Wallstreet: hedge Funds.
What the reddioters would do is buy the cheap GameStop stock, and, as a result, raise the price. What the community was able to do was take a stock that was being sold at around a few dollars per stock, and then drive the stock up to upwards of three hundred dollars per share. The Hedge funds were hurt a lot by this move. What hedge funds do is essentially make the price of a stock go down, then fly in and buy the stock after everyone has sold the stock when it crashes, then sell that stock to make their money back, which is called a short (that was a horrible explanation for hedge funds but that’s the best I could do). What the Gamestop people were able to do was called a short squeeze. By not selling the stock that the Hedge Funds thought they were going to sell, the Hedge funds were losing immense amounts of money by the hour. This would almost start a full-on war between the high and low classes of Wall Street.
The hedge funds would first try and do scare tactics to try and get what they wanted out of the GameStop people. All of it failed. So they decided to go after the one thing that was holding Gamestop together, WallStreetBets subreddit. Around the peak of when the stock prices were going up, the whole subreddit would crash for a day, leading to chaos. People started selling their stocks rapidly. On top of that, the app which people were using to buy the stocks, Robinhood, disabled the ability to buy stocks on the app. After much selling, no one was able to hold much more, and the Hedge funds won.
Although it may seem as if all hope is lost, there are rumors of a second rise of WallStreetBets. Whatever happens with the stock, however, we can assure that the Redditors are not quite done yet. The movement they have started in the masses of the command man has allowed for the greater control of the market to lie in the hands of the people. If anything has came out of this debacle, it has to be that, and that is something that perhaps might shape the future of our financials.
