Gamestop and the Stock Market

Near the end of January in 2020, GME, or the Gamestop Stock, rose suspiciously rose tremendously within only a few hours. Many financial experts were shocked by this, at the time, unexplainable phenomena. However, financial experts soon discovered that stock market enthusiasts on the subreddit WallStreetBets had manipulated the stock market to increase the stock price of GME and give themselves a financial gain. 

How did these ordinary people on the internet, especially Reddit, find a loophole within the stock market? The answer is not entirely simple because quite a bit of background information is needed to understand what occured. Before Redditors took hold of the stock market, GME was a cheap stock selling for $17. At this time, Wall Street was short-selling GME stock. Short-selling is where someone borrows shares and then sells them- hoping that they could find them at a lower price and make a large profit. Wall Street chose GME because it was cheap at the time. However, when Redditors noticed Wall Street was carrying through with these actions- they decided to troll the large hedge funds that were attempting to short the stock. Thus, these Redditors bought as many stocks as possible, driving the stock price of GME to a high of $483 per stock within only a few days. 

However, what many do not understand is the significance of what occurred. In a Davis versus Goliath moment, people on the internet had overtaken Wall Street. Many financial experts question whether, despite this being legal, should be regulated by new laws to prevent this type of massive internet mobilization from happening again. 

As it currently stands, GME has decreased to a value of around $50, leaving the $483 price of GME as an example for economists to study in the years to come. 

 

Works Cited

AnnieReporter. “More Bubbles, Less Shorting. What the GameStop Craziness Could Mean for the Future of Investing.” CNBC, CNBC, 6 Feb. 2021, www.cnbc.com/2021/02/06/what-the-gamestop-craziness-could-mean-for-the-stock-markets-future.html.

Ingram, David, and Lucy Bayly. “GameStop? Reddit? Explaining What’s Happening in the Stock Market.” NBCNews.com, NBCUniversal News Group, 28 Jan. 2021, www.nbcnews.com/business/business-news/gamestop-reddit-explainer-what-s-happening-stock-market-n1255922.

Therrien, Alyssa. “Venture.” GameStop for Dummies: This TikToker Breaks down the Situation, Daily Hive, 29 Jan. 2021, dailyhive.com/vancouver/gamestop-stocks-tiktok-explained.