Story by Destiny Mizell / Contributing Writer
Photo by John Lane / Contributing Photographer
If there is one lesson to be learned in the historical-event-packed year, 2020, its that we Americans can join forces and go against corruption and injustice as a people, despite differences. A prime example of this notion would be the GameStop frenzy that has recently struck our economy and gained immense popularity between those involved in the stock market and those not involved.
In the past few weeks alone, news about the stock market and GameStop seem to have broken the internet.
It all started when Redditor Keith Gill had made mention to his fellow Reddit users on the page “WallStreetBets”, which is known for its focus on short sellers in stocks, to invest in GameStop. Gill recommended buying shares in GameStop because short sellers basically seek out failing businesses, make bets on them and then buy their shares back when the stocks drop.
GameStop was losing money and headed towards joining corporations like AMC, Blockbuster and other nostalgic stores of the past since most luxuries are available online. Despite the fact the business was losing money, though, short sellers like Gill took that as an opportunity to increase their wealth. When a short seller wins their bet of a business falling, they can walk away with quite a bit of cash, and these short sellers did just that.
Since Gill and his ideas were successful, GameStop stocks skyrocketed immediately by notable amounts once he and his army of investors began buying shares. The success is evident when one considers that before, when the business was fading away, GameStop shares were only $4 a share, but with the increase of traffic, shares have increased to more than $200 a share.
Due to the amount of traffic and investors that GameStop stocks received in such a short amount of time, the chain of events created a “short-squeeze”. In sum, a short-squeeze happens when there are no more stocks to buy and those who were involved before get to pocket millions.
Due to the power of the masses, people have become millionaires overnight; However, this has caused conflict to arise between these Reddit users and hedge fund corporations. While these Redditors and investors have gained immense wealth, they did so by not only just short-selling, but by practically taking over and putting these hedge fund corporations, specifically Melvin Capital, at the bottom.
It is evident that hedge fund corporations are not pleased because they, the wealthy stock market dominators, are losing money to average investors. They are in shock that their successful corporations are losing money as businesses of the past such as GameStop, AMC, Bed Bath & Beyond and more are thriving and increasing income at astronomical rates.
As a result of these losses, trading apps like Robinhood are now getting involved and trying to limit the average investors to provide hedge fund corporations economic leverage. This act, might I add, is very illegal. This being so, Robinhood is being hit with quite the lawsuit.
Despite their “upset” feelings, some hedge fund corporations and trading apps are actually no stranger to manipulating others and putting themselves at the top. Some could say that the switching of roles is a result of karma. Overall, this internet phenomena and short-squeeze has gotten so much coverage because of many aspects: the scandal between hedge fund corporations and trading apps and the comical yet powerful underdog story about the power of the masses versus “The Man”. I mean, seriously, just everyday normal Redditors were able to bring down a wealthy and powerful corporation and shine light to the illegalities of Wall Street? Absolutely.
To contact News Editor Toriana Williams, email [email protected].
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