GameStop Stock Soars

Over the past couple of months the Stock Market has been flipped onto its head. In February, this story dominated social media and many news outlets. The hype even reached local newspapers. The events that unfolded in the month prior to this one can only be described as “The Little Guys v.s. Big Guys.” 

In late January, people on the reddit page “r/WallStreetBets,” or “WSB” for short, noticed that hedge funds and professional money managers were shorting the Gamestop stock. Shorting is when an investor borrows a stock, sells the stock, and then buys the stock back to return it to its lender. As the stock drops in price, those people who are in on the short buy the stock at its lowest price. When they buy it at that low price, the price shoots up, and they can sell it at a high price for a profit. The hedge funds and the 1% use methods like shorting to control Wallstreet and the market. According to the reddit page, the average people of WSB recognized that the short was happening, so they got in on it. 

As the hedge funds shorted the Gamestop stock, millions of people bought into it at a low price. Millions of people bought into Gamestop and the stock price skyrocketed. According to The New York Times, “Gamestop’s market value increased to over $24 billion from $2 billion in a matter of days.” Since December of 2020 the amount of shares increased by over 1700%. These events were a once in a lifetime opportunity for the little man to win on Wall Street. It was also a rare opportunity for everyone to get into stock trading. The New York Times also mentioned that “Brokerages like Robinhood, Webull, and Td Ameritrade saw a spike in users.” 

But this market euphoria was short lived. After a couple of days, Robinhood halted trading on Gamestop, AMC, Nokia, and many others that were being shorted. This made buyers panic and the stocks plummeted, resulting in major losses for the “little guys.” The thing that made people enraged was what brokerages like Robinhood and Webull did was considered market manipulation. Market manipulation is illegal because it allows a group of people to control the market for gain without any repercussions. 

According to the Robinhood app, stocks like Gamestop never bounced back after the restrictions, and the prices for them are still low. The reason the brokerages never got in trouble was because many of them are backed by capital groups and hedge funds that lost billions in the shorting incident. When the capital groups and hedge funds lost that much money they worked with the brokerages so they would not lose anymore. The week-long market high was just another example of how the game was, and always will be, rigged for the people in power.