Dethroning the King: Reddit Vs. Wall Street

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Wallstreetbets, the Reddit community that sparked the Gamestop movement at the start of the year. (Credit: Deniz Ilksoy)

Denis Ilksoy, Staff Writer

What are the odds that David beat Goliath? What are the odds that the millions can take on the upper one percent? Pretty slim if you ask most people. However, in late January of this year, the masses decided they had had enough of the devious scheming carried out by billionaires who get richer by the minute. The result was massive Wall Street billionaires losing over 13 billion dollars in total losses and the common people making their own personal fortunes.

To understand what drove this amount people to suddenly rally together and take on some of the most powerful people in the country, you need to know what the billionaires did to enrage so many people. In the stock market, when a business is successful you can invest, or bet, on the fact that the business will continue to be successful in growth. The better a business does, the more money you will make, which seems simple enough. Well, for the more advanced investor, the inverse can also be true. A stock doesn’t need to be doing well for someone to make money. There is a process known as short selling which entails that an investor “borrows” a stock from a broker at a certain price, waits for the company’s value to fall, then sells it back to the broker for a lower price, and pockets the difference. In simpler terms, the rich crush unsuccessful businesses and become exponentially richer. It is widely considered a despicable practice, especially among those who lead everyday lives.

Unfortunately for these billionaire hedge funds, they decided to pick on the wrong company. Gamestop, widely known as the walk-in video game retailer infamous for its terrible sell-back prices, still dominates a place among the childhoods of many who grew up in the era of hard copy videogames. Since streaming has become so popular, especially with gaming services, Gamestop has been seeing its stock price drop more and more in recent times. The preying vultures, also known as hedge fund companies, saw their chance, took it, and began capitalizing off the demise of the beloved gaming business. 

Their huge mistake however, was underestimating the younger generations who cherish the simpler times of their youth. Suddenly, a spark was created on a social media platform known as Reddit, in a community filled with amateur investors trying to earn their keep. Wallstreetbets, as it is known, became the talk of the town and the news of the hedge funds’ malicious practices spread with it. If the masses were to invest as much money as they could into Gamestop, it would reverse the effect of the short caused by the hedge funds and deal them a major blow in losses. A patchwork plan was quickly devised by Reddit users and all eligible investors were implored to join in. 

In the last week of January 2021, the once hopeless Gamestop’s stock price began to go nuclear. From January 4 to 27, the value shot up 1900%, something that occurs only once in a blue moon. From friend to friend, social media platform to platform, the culture and memes behind Gamestop began to spread like wildfire. “Hold the line!” “To the moon!” and “Do not sell!” were phrases echoed by the people who were once walked over by the rich. The tables had finally turned. 

Hedge funds began to actually panic as what was thought to be a small leak in their profit ship turned into a flaming, cannonball-sized hole. They were forced to buy more of the stock to dampen their losses, which only drove the Gamestop price even higher. After an all time high of $483, up from a measly $20 at the start of the year, the billionaires began to use much more devious practices to strike back. An app based stock broker known as Robinhood, which prided itself with its mission to “democratize finance for all,” blocked off the ability to buy any more Gamestop stock, citing the “recent volatility” as reasoning. In response, the Internet did what it does best, and ripped apart Robinhood’s whole story, discovering that Robinhood was intending to go public on the stock market, and so were looking for big investors for their venture. How satirically ironic it is that the literal “Robinhood” was the one actually conspiring with the rich the whole time.

Eventually, as all good things must come to an end, the Gamestop stock finally settled at around $40 in mid February, but not before the might of the people was demonstrated and a severe blow was dealt to the criminal bureaucrats on Wall Street. The billionaires used their standing in the only other place where they could strike back: in court. Just two days ago, on February 18, Congress held a hearing with several major parties involved, including the Reddit CEO, Robinhood CEO, the Hedge Fund companies, and almost unbelievably, a Reddit user named Keith Gill, who made an unfathomable 46 million dollars off the surge. 

Of course Congress justified the investigation into the stock to make sure there weren’t any “immoral practices” employed by the Reddit users. The whole situation is unbearably ironic to an almost unfair point. The politicians who regularly practice insider trading, which is illegal, are paid by big businesses such as hedge funds, and have the audacity to arouse suspicion when the lower classes start to make their money. It is outrageous and insulting to the citizens of the United States to be walked all over by bureaucrats who think the power is all theirs. But fortunately for us, a simple video game retailer showed us that while the rich 1% hold over 70% of the nation’s wealth, 100% of the power is in the hands of the people should they rise up together, which is more vital than ever in this day and age.