I’m no fan of GameStop, but seeing Reddit users use it to troll wealthy hedge funds on Wall Street is as amusing as it is confusing.
Right out of the gate I want to warn you I’m not a Wall Street expert. The Reddit users over on r/WallStreetBets are doing… a thing. And that thing has caused certain stocks to skyrocket. Their first outing with this thing was GameStop, a company which I haven’t been shy about criticizing before, and as of this morning they’ve seemed to move on to AMC (whom I’ve also been critical of before), and other miscellaneous companies. It’s a whole mess and Very Important People are freaking out about it.
Try as I might to understand the nuances of the situation, I am just not an expert on it so here’s a brief summary from people that know what they’re talking about from CBS:
When short-sellers bet a stock will decline, what they effectively do is sell shares they don’t have, with the promise of delivering those shares to the buyer at a later date. […]
The problem is that if the stock goes up instead of down, short-sellers must quickly buy the shares they don’t actually own to avoid further losses. If many short-sellers all think that a given stock will fall, as they were with GameStop, which hasn’t turned a profit in three years, and the stock goes up, mayhem can ensue in the rush to buy shares. That’s what appears to have happened.
Still, the cheerleading from commenters on Wallstreetbets does seem to be playing an outsized role in GameStop’s near-2,000% rise.
So why am I writing about stocks when it’s clearly not my area expertise? Because it provides an interesting glimpse into how a bunch of Reddit nerds can have a very real impact on very serious real world institutions very quickly, thanks to the collective power of the Internet. And, frankly, seeing Wall Street and major news outlets melt down because of said Internet nerds doing their thing is incredibly amusing. Nerds have a hell of a lot of power and mainstream institutions don’t quite know how to handle it. That’s not exactly a new thing, but the way this is unfolding is certainly novel.
The fact that GameStop was their first pick gives a bit of insight into the type of people behind this event. It not only had the requirements needed to do this stock short-sell technique, but the company itself has a terrible reputation among nerds. The amount of money they offer people to buy back used games in their stores is laughably low, they have terrible employee policies, and their insistence that they are an ‘essential business’ during the pandemic is terribly offensive. You’ll be hard pressed to find a nerd ready to defend the company, and many of us expect it to go completely out of business at some point in the near future. So seeing a company that’s quickly going down the tubes suddenly shoot up higher than TESLA is, well, damn hilarious.
Now that these Reddit nerds are expanding beyond the trolling with GameStop and expanding to other companies like AMC, Nokia, and Tootsie Roll, this is probably going to expand far beyond our little Internet circles, though. The government is probably going to crack down on this type of trading with some regulations, and people who got in late to the game or don’t quite know how it works are probably going to lose money in this whole affair. It won’t be so funny seeing average folk who stumbled into this mess lose a bunch of money, so I beg our readers to please PLEASE not engage with this unless they absolutely know what they’re doing (unlike myself). There will be losers in this mess, and I hope most of our followers can avoid falling victim to it.
All that said, for the time being, as someone who has absolutely no skin in this game and won’t be losing any money, I can sit back and watch this group of nerds stick it to The Man with hilariously notorious companies until Uncle Sam gets tired of it all and puts regulations on it. As a bystander, the story is great to watch unfold.
Author: Angel Wilson
Angel is the admin of The Geekiary and a geek culture commentator. She earned a BA in Film & Digital Media from UC Santa Cruz. She’s contributed to various podcasts and webcasts including An Englishman in San Diego, Free to Be Radio, and Genre TV for All. She’s written for Friends of Comic Con and is a 2019 Hugo Award winner for contributing fanfic on AO3. She identifies as queer.
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