The Reddit Hivemind Swarms the Stock Market


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Last month, a group of Redditors decided to massively invest in Gamestop stocks. This sudden surge of trading drove the stock prices to nearly five hundred dollars at their peak. It used to be about fifteen dollars back in December.

The cause of this surge was due to many hedge funds short selling stocks in Gamestop. The Redditors had mainly wanted to spite the wall street millionaires and get back at them.

Short selling is where an investor predicts a stock price will go down, so they borrow stocks and sell them, only to buy them back for less money when it lowers. Afterward, they return the stocks and keep the leftover money from buying the cheaper stocks.

Though due to Reddit, the price went up instead. This is what is called a short squeeze. Now the investor has to buy the stocks at a higher price to return them and lose money in the process.

With this event, many hedge funds were put in unfortunate positions. At the start of February, hedge funds have lost 13 billion dollars on the stocks.

Naturally, there was some anger among the investors. Some demanded reform, that the situation was unfair and needed to be fixed. Many Redditors were quick to point out the hypocrisy of the statement, as this wasn’t exactly a new concept. The very same investors had grown many of their riches with similar techniques.

Robinhood is an application meant to make trading stocks easier. This company responded to the situation within a few days of the surge in Gamestop stock. Despite its namesake, this Robinhood gave into the riches demands. On January 28 they shut down the ability to sell Gamestop stocks.

This move has severely damaged their public opinion and caused many to switch off of their platform.

As of today, the stock has dropped considerably but still remains about three times the value as it was before the event.

Overall, the situation served to highlight many of the flaws within our stock market, and how a large group of people could abuse the system. Perhaps this event will lead to positive reform due to the publicity.

Of course, it’s unfortunate that even talking about change didn’t happen until someone other than the elite benefit. However it is still better than the elite continuing to benefit and no one else.

Who knows if this will be a one time thing, or just the first of many surges, but one thing is for certain this is an event that won’t easily be forgotten.