Reddit, Gamestop, and the Fall of the Stock Market

Reddit%2C+Gamestop%2C+and+the+Fall+of+the+Stock+Market

Bixby Piccolo Hill, Writer

Recently, there’s been a lot of chatter surrounding the stock market, and specifically the Gamestop Reddit hedge-fund incident. You may have heard of the phrase “To the moon!” But what is a hedge fund? How does Reddit, a simple forum-based social media platform, hold so much power? And why did they choose Gamestop to manipulate the market? The answers to those questions are relatively simple.

Reddit is known for having a hive-mind mentality that can easily put the power of thousands behind a single idea, so manipulating a mainly investor-based market was simple. Stocks are based on interest, so the more interest people display in them, the more they are worth. When hundreds of people invest in a stock, the value of that stock shoots up drastically. 

At the end of January 2021, Gamestop stocks shot from $20 a share to $347.51 per share. This was an increase of more than 1700%. However, Redditors chose to simply “hold the line”, hoping to show stock market financial analysts that they didn’t agree with the way the market is seen as a playground for the elite.They weren’t in it for the money, they simply wanted to have been part of something interesting and to support one of their favorite businesses that had been a big part of their childhoods.

But what is a hedge fund? And how were they trying to bankrupt Gamestop? Hedge funds are made up of investors who put in money to be invested by the leaders of the hedge fund, who will then return the money with interest when they bring in a profit. The hedge fund involved in the Gamestop incident, Melvin Capital, was led by Gabe Plotnik, and their goal was to make as much money as possible by pushing Gamestop into bankruptcy. Reddit’s forum, and through their determination  the hedge fund has been completely broken up. 

However, this ‘last stand for the common man’ was not entirely positive for the Redditors Almost everyone who had invested in the stock short-term had lost thousands of dollars. The most admired and hated subreddit on the internet, r/wallstreetbets, showcased pictures of the thousands of dollars people lost overnight. While this loss would be catastrophic to people who were looking for quick cash, for the Redditors, it was their way to save a business that they supported and also to make their own little mark on history. And it is indeed ground-breaking, because it proved that social media platforms are a way to unite people to enact genuine change against big businesses.