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Reddit: The Catalyst of America's New Investment Ploy?

  • Writer: The Monthly
    The Monthly
  • Mar 7, 2021
  • 4 min read



Once again, social media’s omnipotence has struck headlines as an online battle thunders and roars upon the stock market. In a calculated plot, mere Internet users armed with keen eyes and slick knowledge compelled hedge fund moguls to their knees. Through Reddit, a versatile networking site dedicated to sparking discussion and sharing content, amatuer investors executed a rebellious prank leaving the wealthy 1% dumbstruck in the stale dust of their victory. The ivory towers on Wall Street may look pristine standing amongst riches, yet inside, scurry stockbrokers out-witted by the likes of ‘Stonksflyingup’ and ‘RoaringKitty’.


Stocks and shares often appear like a foreign and perplexing notion, dependent on the equally complex and fluctuating economy. Fortunately for us, the typical formula to make a profit with these bewildering concepts can be made quite simple: buy low and sell high. But in this case, it's the very opposite. Known as shorting, money can be generated instead when a stock goes down, by placing bets on them beforehand. Normally, if tedious observance indicates a company’s stock will fall, you may choose to sell your shares -or those borrowed from a brokerage- while they are still highly valued. Although this technically means you owe those shares back to your brokerage, by waiting for the stock price to deflate as predicted and buying them back considerably cheaper, you’ll obtain a large profit. So, what does this all mean? Should we set up camp and begin studying the stock market, waiting for stocks to tumble down? Well as many would soon discover, it’s not that simple.




Deemed an essentially obsolete company, Gamestop is an American high street shop specialising in selling games, consoles and other electronics. In April 2020, the stock for Gamestop was valued at an all-time low of $2.57 after wrestling against the ever-dominating online shopping experience through a painstaking pandemic which never fails to wound the retail market. To no one's surprise, greedy WallStreet Hedge Fund managers snatched at a seemingly golden opportunity to make a profit. To short Gamestop would have been ‘Economics 101’, right? However, much to their demise, user Keith Gill from subreddit ‘r/wallstreetbets’ caught wind of this sly plan and encouraged other members of the site to drive up the stock price, forcing short sellers to immediately buy back the shares they’d borrowed, pushing the prices even farther up. Millions of pageviews and one Elon Musk tweet later, as of 28th January 2021 GameStop’s all-time highest intraday stock price reached a colossal $483.00.


A controversial question raised during this humorous escapade beckons: who is the real villain in this scenario? On one front defiantly stand a group of largely younger traders coordinating on a free social media site with hopes of assisting struggling companies whilst benefiting themselves.The army of everyday internet users comprise of ordinary people such as Seth Thomas, who amassed 23,000 shares at roughly $10 each, and sat on $9 million when Gamestop initially surpassed $400 a share. On the opposing team prevail Wall Street’s elite: incredibly affluent Hedge Fund strategists who depend on deteriorating vulnerable companies to strike. Yet, they are responsible for the livelihoods of thousands from the influential high-class who rely on their strategic moves to uphold many institutions we all benefit from. This surge absolutely did not fail to deplete their silver lined pockets, as Business Insider estimates short sellers have lost almost $19 billion and filed for bankruptcy. Nonetheless, now that the exhilarating performance of January 28th has ended, Reddit users like Thomas are down nearly 80% on their money; it’s unclear if the flailing rewards were even worth the fight.


Is that a bird? A plane? No! An incoming fleet of lawsuits.


No one emerges from hostile battles unscathed, not even bystanding Stock trading apps like Robinhood. After the inconceivably failed gamble of shorts, Robinhood prohibited purchases of Gamestop shares along with other high-risk stocks to their customers. Limiting trading without proper communication, left trading clients furious, posing claims of ‘market manipulation’ and sales of their stocks without permission. Other brokerages followed suit, causing stock value for prominent companies like AMC and Blackberry to plummet down, whilst Reddit influencers beseeched members to safeguard their shares. Dozens of cocked and loaded class-action lawsuits propelled toward Robinhood, increasing the volatility of their blunder and provoking the US Congress to closely monitor the power struggle. A grand meeting of CEOs from Reddit, Robinhood, Citadel - and Keith Gill - convened on 18th February chaired by US Rep. Maxine Waters. During the intensely heated debate Gill made repeated references to memes, much to the dismay of US representatives who focused on aggressively interrogating the accused as they took the defensive.


The authentic tale of Robin Hood prevails centuries after conception, where a young vigilante triumphs in stealing from the rich and giving to the poor. Sound familiar? Achievement-oriented Millennials and ever-ambitious Gen Z’ers have vilified these large Hedge Funds as tyrannical corporations who have created a dangerously temperamental financial system. Fueled by raw emotions of a childhood jolted by the Great Recession of 2008, ‘attacking wealthy people’ has claimed vengeance upon the prosperous simpletons who exploit the underprivileged every day under deceitful pretense of business. The youth can no longer be overlooked as casualties during inevitable ‘hard times’ for hedge funds. The youth can no longer be blamed for a few blubbering Wall Street magnates who have finally felt a glimmer of financial loss. Money is war, and sometimes, even the all-powerful can lose.


In this sense, we can understand why The New York Times’ article on GameStop ended with this quote from the wife of a retail investor: “Eat the rich”. Still, there is always a flip side to any coin. Were the Reddit users unfair in their maniacal treatment? Let us know your judgement in the comments!


Charlotte Rodney 12E

Manaal Khan 11B


  • To discover more on the art of shorting and the 2008 crisis compacted into a charmingly, comical and Oscar Winning film, watch “The Big Short” - Age rating 15+


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