What’s going on with the GameStop stock?

The+GameStop+stock+grew+exponentially+after+a+Reddit+group+decided+to+ruin+investors%27+short+sales.

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The GameStop stock grew exponentially after a Reddit group decided to ruin investors’ short sales.

Caleb Hiatt, Sports Editor

Over the course of the last couple of weeks, there has been a lot of talk about the stock market. Internet comment sections have been flooded with comments like “GME to the moon!” This is all because of the efforts of Reddit group WallStreetBets to screw over Wall Street investors.

To fully understand the chaotic state of the stock market, we have to know what short selling is and how it helps investors. Short sales are when an investor anticipates the fall of a stock and borrows a share of the falling stock from a broker for a period of time. The investor then sells the stock and buys it back at a cheaper price before he has to return it to the broker, so he can make a profit. So for example, let’s say Carl is an investor and borrows a stock from Bob the stockbroker for a month. Carl would get this stock at a price of say, $10 and sell it right away. Carl now watches the stock drop and waits for the month to be over. Let’s say at the end of the month the stock has dropped to just $1. Carl will then buy the stock back at this lower price and give it back to Bob. After this whole process, Carl profited $9 off of his prediction that the particular stock would fall.

This is the strategy that Wall Street investors were popularly trying with the struggling video game retail company, GameStop (GME). Members of the WallStreetBets subreddit page were angered that people were profiting off the failure of the beloved store. The members came to the conclusion that they could raise the price of the GME stock to cause this short sale strategy to fail. They did this by collectively deciding to buy shares of the GME stock to artificially inflate the price of the stock so when these investors buy the stock back at the end of the month it is far more expensive than they anticipated. 

After GME went “to the moon” other commonly shorted stocks also saw a rise in increase such as American Airlines and BlackBerry. Reddit took control of Wall Street as many members of the subreddit commented on their current dominance of the stock market right now. One post on this WallStreetBets subreddit was titled: “FOR ALL THE BIG ——- HEDGE FUNDS MONITORING US, THIS IS A MESSAGE FROM US TO YOU, WE ——- OWN YOU NOW. —-. YOU.” The members of this subreddit are obviously proud of the control they have on the market at the moment while Wall Street is simply in awe, and maybe a little fear, of the power that Reddit has as Robinhood, an investing made easy app, banned its users from purchasing more shares of the GME stock.