The internet’s trends are impossible to predict. Who knew that as the first month of 2021 wound down, we’d all be chattering about stocks? If you’re not constantly on the web though, these conversations may be confusing–so let us bring you up to speed.
The story starts a few months ago on the open forum site Reddit. According to CNet, users apart of the subreddit group WallStreetBets have been working to drive up the value of stock shares and this time around, they were in support of video game store GameStop, even though Wall Street’s elite–you may also see them referred to as “hedge fund” folks—had all but eulogized the company. This is technically referred to as “shorting,” which is betting that the cost of shares would decline. GameStop’s sales growth has been slow since the need to physically go out and purchase games and consoles isn’t what it once was.
Working against Wall Street was a bold move, but it’s paying off right now—the market value for GameStop increased by over $20B in just days. This same process was then applied to other aging or poor performing companies, including Blackberry and movie theater AMC, the latter of which was hit hard by the COVID-19 pandemic. The chain of events is an example of what can happen when everyday people work together and against the wealthy, using their own methods against them.
Tesla CEO Elon Musk, who apparently has an issue with shorters, even got in on it, further exposing the trend. He tweeted out the link to the Reddit group on January 26 and called shorting “a scam” on January 28.
Oh but of course, there are caps on the reciprocity and many are viewing such as a capitalistic attack. On January 28, stock trading platform Robinhood moved to restrict trades of both AMC and GameStop, effectively taking their hand of the equation that’s causing hedge funders to lose money, which is what happens when you bet stock will go down but the opposite occurs.
This has caused politicians like U.S. Representative Alexandria Ocasio-Cortez to speak out. “This is unacceptable,” Ocasio-Cortez wrote to her 12 million followers. “We need to know more about [Robinhood’s] decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services [Committee,] I’d support a hearing if necessary.” Over 500,000 people are in agreement with her, on Twitter at least.
One of Ocasio-Cortez’s unlikely supporters was Republican U.S. Senator Ted Cruz, who quote tweeted her, saying “Fully agree.” The comment was met with pushback from the representative though, who holds Cruz accountable for the insurrection at the Capitol earlier this month. “[I]f you want to help, you can resign,” she wrote.
So, the dissension is over how the rich get to capitalize off of a process and have a hand in the economy, but amateurs are excluded just as they’re figuring out the game. It’s classic America—seeking to protect and serve those who need it least.