Allow Us To Explain To You What Is Going On With GameStop

Published on 02/25/2021
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This is a story about a revolution. You do not hear about this every single day. Most of the time, people imagine guns and guillotines when the word comes up, but this is one made by 0s and 1s. Can you believe that we now have the privilege to become witnesses and even participators of something this big? When the so-called small people realized the power in their hands, the powerful one-percenters found themselves with the short end of the stick. If you ask us, it was about time.

Allow Us To Explain To You What Is Going On With GameStop

Allow Us To Explain To You What Is Going On With GameStop

Where It All Started

It all began on Reddit. On a subreddit called r/wallstreetbets, users from all over the globe discussed stocks and shares. Of course, it came with the same unique qualities that you can only find on the social media platform. Millions of users would share memes and photos, upvote and downvote. Many did so with a tone of self-loathing. In the subreddit, you would often find people discussing the market. This was where a plan came into fruition.

Where It All Started

Where It All Started

Bringing It To Their Attention

A Reddit user called u/DeepFuckingValue posted a few times about how Gamestop was doing on the stock market. The value was only going up over time. He also talked about how its stock was underpriced for how much the company was worth. He then guessed what would happen next.

Bringing It To Their Attention

Bringing It To Their Attention

A Lot Of Money

Through his posts, other users got to see that his balance kept growing. It was like a self-fulfilling prophecy! Others began to buy shares and stock options, which only made the price go up even more. If you want to understand how much it grew, you only have to compare its price at the beginning and the end of January. On the first day of the month, a share was worth $18. Four weeks later, it was worth $325! The huge increase totaled nearly 2,000 percent. However, it did not come without consequence.

A Lot Of Money

A Lot Of Money

How The Stock Market Works

Sadly, something happened to put a stop to their fun. The powerful, rich men wanted to get more than their fair share of the pie. In reality, the stock market is organized so that these people had the upper hand. They wanted to use this knowledge to make everyone else poorer while their money bags grew fatter. They did this with a technique known as “shorting a stock” or “short-selling.”

How The Stock Market Works

How The Stock Market Works

When You Short Stocks

Allow us to explain it to you if the concept is not familiar. When you short a stock, you are basically counting on the thought that its price will drop. You then borrow these shares at the current price and hope that it gets devalued shortly. By then, you can buy to cover or return the borrowed stocks and then pocket the price difference.

When You Short Stocks

When You Short Stocks

An Example

If you borrowed or shorted a share of Stock X while it was worth $8, you could buy to cover or return it once the price goes down to $5. This would mean a profit of $3. The plan does not work when the price keeps going up. When that happens, you instead lose money since the price will be worth more than $8.

An Example

An Example

It Is A Modern Revolution

In case you have not picked up on it just yet, the big guys are those at hedge funds. In essence, these are enterprises responsible for investing billions of dollars and driving the stock market. They began to short Gamestop until they got to the point that it was shorted 260 percent. This meant 160 percent more than the stocks actually available on the market. With the power they had, they assumed that they could drive its price all the way down to the bottom. They soon found out that they were wrong about that.

It Is A Modern Revolution

It Is A Modern Revolution

Time To Fight Back

When it came to the users’ attention on r/wallstreetbets that the Gamestop stock is the most shorted in the market, they decided to do something about it. They wanted to teach these hedge funds a lesson. It did not sit well with the Redditors at all. But what exactly could do they do about it?

Time To Fight Back

Time To Fight Back

Bye To Billions Of Bucks

People began to buy more GME, which drove the price higher and higher. As the price of the stock grew, the hedge funds lost more money. While they were panicking, the internet was having a lot of fun watching them go down. This was one of the few times that the rich people were losing in the market.

Bye To Billions Of Bucks

Bye To Billions Of Bucks

Elon Musk Joined In On The Fun

In fact, the situation caught the attention of celebrities as well. Elon Musk of Tesla fame got wind of it and tweeted about it. This only added fuel to the fire. After he publicly talked about it, the stock price multiplied in a matter of hours. Sadly, it was not all sunshine and rainbows.

Elon Musk Joined In On The Fun

Elon Musk Joined In On The Fun

What The Media Had To Say

By now, we all know that lobbies of huge companies run the media. They basically dictate the opinion of the public in more ways than one. Sadly, the publications blamed the Redditors instead! The media called them the cause of all the uncertainty in the stock market.

What The Media Had To Say

What The Media Had To Say

By The 27th Of January

Gamestop was having yet another field day on January 27, 2021. But it only grew more chaotic toward the end of the day. Brokers, hedge fund managers, and policy-makers were only growing more worried by then. Several brokerages ended up putting restrictions on the buying and selling of Gamestop stocks and options. Aside from that, the White House said that it was monitoring the situation.

By The 27th Of January

By The 27th Of January

The Stock Price Went Down

As the stock price kept going against their expectations, the doubts and fears of the bigshots grew. This marked the end of all the fun. The stock price plummeted, but a lot of people rebought shares or flat-out refused to sell the ones they had. This was not the end of the story just yet.

The Stock Price Went Down

The Stock Price Went Down

An App Called Robinhood

In the United States, Robinhood is one of the leading stock brokerage applications. It allowed the average Joe to buy and sell stocks. A lot of Redditors used it to buy Gamestop stocks, which drove the prices higher. They were having a good time as well! Sadly, this was not meant to last forever.

An App Called Robinhood

An App Called Robinhood

A Questionable Move

You see, Robinhood and many other brokerage apps put an end to all the fun the Reddit users were having. On January 28, Robinhood disabled the option to buy any Gamestop stock or option. The users were only allowed to sell. By the end of the day, GME fell by 44 percent. The price went from $347 to $193.60. It was truly a dark day for the free market.

A Questionable Move

A Questionable Move

From Politicians Too

A lot of people criticized the move. It did not only come from netizens since political parties spoke up about it as well. When Alexander Ocasio-Cortez and Ted Cruz agree, you know that it is serious. They knew that it was unfair to arbitrarily place restrictions on trading even though the hedge funds could still freely buy and sell. Robinhood issued a response to address these concerns.

From Politicians Too

From Politicians Too

According To A Whistleblower

Even though Robinhood claimed to have done it out of caution for the users, a Robinhood employee said this was not the case. According to him, it was nothing more than plain corruption. It could not at all come as a surprise if this turned out to be the case. Many people believe that the White House works not for all of its constituents but only for the privileged. What happened after this incident?

According To A Whistleblower

According To A Whistleblower

They Were Not Happy At All

The users began to complain about the restriction placed by Robinhood. People went to their lawyers, hoping to settle it legally. They have since filed lawsuits against the company for breach of contract. After all, it failed to share that it was “was going to pull a profitable stock from its platform randomly.”

They Were Not Happy At All

They Were Not Happy At All

The Company Took It Back

It was only at the end of the day that users were allowed limited stock trading via Robinhood once more. No one knows why. Our best guess is that the company had been afraid of the public outcry, as well as its potential outcry. However, we are sure that the previous limitation will not be forgotten.

The Company Took It Back

The Company Took It Back

Looking Into It

The US Securities and Exchange Commission will investigate Robinhood from preventing users from trading shares of GameStop and seven other companies. A couple of other platforms also did the same thing and will undergo similar procedures. If you ask us, this is a win for the regular Joe.

Looking Into It

Looking Into It

The Media Blamed The People

The media kept blaming the volatility of the stock market on the users of Reddit. By doing so, they depicted the billionaires and the hedge funds as the victims here. It is a good thing that the internet is around. This way, people can understand the situation and figure out who is truly at fault here. Keep in mind that the small investors did not do anything illegal in this situation.

The Media Blamed The People

The Media Blamed The People

Let Us Remember The Pandemic

It is also wise to remember the repercussions of the coronavirus pandemic. This has led to millions of people losing their jobs. Many of those who got lucky have no choice but to work in dangerous and inhuman conditions. A lot of people have lost their source of income because of the pandemic. This is not the case for everyone, however.

Let Us Remember The Pandemic

Let Us Remember The Pandemic

Different For The Rich

Can you believe that the ten richest people on the planet have gained even more money? They even made enough to buy entire countries during this trying time. The companies that distribute goods, like Amazon, are doing especially well. The rest of the world might be suffering, but the ones on top are only growing richer and more powerful. This did not sit well with the netizens of the world.

Different For The Rich

Different For The Rich

The New York Times

The New York Times has made a name for itself as one of the US’s leading news agencies. It released a post suggesting that amateur investors were driven by both boredom and greed. This caught Redditors’ attention, who used this article to show the bias of mainstream media.

The New York Times

The New York Times

A Hilarious Response

There is truly a world of difference between the regular folk and those at Wall Street. Everyone is aware that the game is rigged so that the people on top can make even more money. However, no one really knew their power until recently. In the past, it felt like we had no chance of taking them on.

A Hilarious Response

A Hilarious Response

Why People Need To Unite

Ordinary people realized just how powerful they are when they work together. This story has made this even more evident. The hedge funds thought that they could exploit the market and control it to their will. However, some self-proclaimed “degenerates” made them understand what it is like to be on the stick’s short end. However, there is true danger on the way.

Why People Need To Unite

Why People Need To Unite

The Battle Is Not Yet Over

These “degenerates” might have claimed victory this time around, but it is only the first in this war. If folks begin to sell their shares, it is only inevitable that panic will come after that. The hedge funds will win because their shorts remain possible. There is now a campaign trying to get people to keep their stocks to keep going up. By doing this, the hedge funds will lose even more money.

The Battle Is Not Yet Over

The Battle Is Not Yet Over

The Message Is Clear

“You can’t mess with us! The game is over for you,” one of the Redditors said. This has only made us believe that the common folk holds power. They realized that they had a common enemy and united against them. We are all familiar with the adage that goes, “the enemy of my enemy is my friend.” This story has made us see this in action on a global scale. However, this is far from the end.

The Message Is Clear

The Message Is Clear

Scared As They Should Be

Now that the modern age revolution is ongoing, no one can predict what will happen next. However, there is one thing that we are certain of. The stock market is going to take a while before it forgets this important lesson. We are sure that they now fear that this will keep happening over and over again.

Scared Like They Should Be

Scared Like They Should Be

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