Redditors, gamers and Wall Street bankers: No, this isn’t the start to a bad joke

Wall Street Bets, a group of millennials coordinated through the Reddit forum, increased the value of the shares of the video game company ‘GameStop’, which resulted in billions of losses to Wall Street funds that were betting on its bankruptcy. 

Despite being the focus of a wild swing in value and attention in the stock market, brick-and-mortar GameStop storefronts remain relatively empty and ignored.

Crimson Times staff

Despite being the focus of a wild swing in value and attention in the stock market, brick-and-mortar GameStop storefronts remain relatively empty and ignored.

Reddit, a social news website where users create the content, found itself responsible for millions of dollars lost by Wall Street. Reddit, however, won’t be paying Wall Street back.

When Wall Street Bets, a popular thread on Reddit, found out that a major bank was planning to short the stock of GameStop, they encouraged people to purchase GameStop shares in an attempt to make money and send a message to Wall Street. 

Short selling is the selling of borrowed shares, also known as stocks,  of a company heading for bankruptcy when their value is high and buying them back when their price has fallen in order to make a profit when returning them to the company. This way of generating income is banned in many countries because it is a scavenger way of generating money. Short selling involves making money at the expense of the loss and misfortune of others. 

GameStop is a company that has had a hard time competing in the digital era. Its market was always the sale of physical video games, but now almost all games are bought and downloaded online, which has caused a plunge in the value of its stock every year. Short selling GameStop’s stock was a sure way to make a profit, for the big banks.

Wall Street Bets discovered that in a successful short selling, the big banks would profit and GameStop would lose. So, the Redditors, gamers, and those in between who heard about the attempted short selling, decided to do something about the situation. 

In order to “win,” the millennials leading the charge realized that if they purchased GameStop stock in bulk, the price per share would go up, ultimately increasing GameStop’s market value and making Wall Street’s attempted short sell virtually impossible.

At the end of last year, the value of GameStop stock was only $13.31, but with the massive buying by members of Wall Street Bets, and people who just wanted “in,” its value increased to $347.51, which meant monetary losses for short-sellers of GameStop’s stocks.

This blow to the stock market is considered one of the biggest in history, and its impact was so great that many people followed the example of Wall Street Bets and bought shares of companies heading for bankruptcy, such as AMC, Nokia, and Blackberry, among others. 

Most people who purchased GameStop stock did so through Robinhood, a mobile application for trading on the stock market. Due to the volume of users wanting to purchase GameStop stock, Robinhood stepped in and vetoed the buying and selling of GameStop’s shares, resulting in a possible lawsuit for the trading company. Some users even reported that the app had sold the shares they bought without their permission.

Vetoing free selling and buying is a crime in the United States. However, many would argue that the decision on Robinhood’s part to veto stocks transactions was to avoid an overload on its server due to the sudden increase in users logging on at the same time. 

Insiders such as Andrew Athias, better known as The Reese’s Guy on social media, believe that the veto on buying and selling shares was to “burst the bubble” that had been created by the unexpected purchase of GameStop’s shares. The veto “was to protect Robinhood users from monetary losses by buying GameStop stocks, which would plummet again in a few days,” Athias said.

Prior to this blow, the idea of implementing regulations to prevent fluctuations in stock prices had already been raised, but the wolves on Wall Street were reluctant to implement such controls. After the successful blow, these wolves are now considering the implementation of these regulations.

This historic blow to the Wall Street stock market by Wall Street Bets showed how volatile the stock market world is and how easy it is to manipulate. GameStop’s stock value increased because of noise and because of word-of-mouth marketing, not because shareholders saw GameStop as a company that will succeed in this digital age or that is capable of fighting in the video game market.