• Owen Stephens

The Stock Heard Around the World

All eyes are on GameStop as the stock market crashes. Tensions are high while a battle for power erupts between the masses and the elite.

GameStop has been out of the public thought for over a decade. Sales have been falling and stores have been closing, while the gaming industry has made the shift to online sales. Why go to a store when everything is online? Especially during a pandemic!

Unsurprisingly, Wall Street giants like Melville Capital, began betting against the retail store. Without getting too technical into the finance jargon, hedge funds were shorting GameStop. Think of it as the opposite of buying a stock. When you buy a stock, you make money if the price goes up, and if you short the stock you make money if the price goes down. However, this is very risky. When buying a stock, the worst that can happen is the stock moves to zero. Short positions open yourself up to potentially unlimited loss, because the stock price can go up forever.

A group of Redditors on the page r/wallstreetbets (WSB) identified that hedge funds, like Melville Capital and Plotkin’s firm had taken out these risky bets on GameStop. They were betting on the antiquated store to go out of business because of COVID. Redditors realized if they could make the stock price go up, they could cost the elite billions of dollars in losses. And there is one easy way to make the stock price go up... buy a lot of stock. WSB saw this and told its users to buy. The rag tag army of Reddit users came to fight, shooting the stock up over 700% causing what is known in finance as a “short squeeze”; Where hedge funds who are short a stock are forced to buy large amounts in of shares in order to cover their losses. This in turn sends the stock even higher. Think weird Ouroboros that results in Wall Street losing billions.

Many are asking, “is this legal?”, and the answer is yes. From where I am standing WSB is simply used their first amendment right. They just said, “I like this stock and here is why I like it”. Hedge funds do this all the time. They take out huge short positions on a company, then immediately step onto their pulpit and preach to CNBC or FOX Business. Using their power and influence to tank the stock, making millions overnight. After all, “when EF Hutton talks, people listen”. However, today it is no longer EF Hutton, but Reddit that has our ears.

The New York Times identified this movement as an internet joke being “propelled by a mix of greed and boredom...”, which fundamentally mischaracterizes both the people involved and their motivation. They are failing to recognize that the poor and middle class are doing this out of spite. This is the biggest event regarding class warfare in a decade, and the media is reducing it to the internet equivalent of a ding-dong ditch. At its core, we are seeing the disenfranchised fighting to be heard. Now, millions are answering their call as WSB gains over 2 million users in less than a week.

In 2008, Millennials and Gen Z were forced to grow up amidst the greatest economic recession since the Great Depression. They remember watching their parents lose their jobs. They remember getting kicked out of their homes. They remember most of all who was

responsible... During the recession, personal retirement accounts got wiped out, while the banks got bailed out at the public’s expense. Melville Capital’s continued existence is a painful reminder that they were never held accountable.

Now, in 2021, we are facing a new crisis. Unemployment has reached the highest level it has been in the last 100 years, and people are being evicted from their homes. Meanwhile, the stock market continues to reach new record highs. They are seeing the same companies responsible for destroying their lives in 2008 being bailed out AGAIN, while our government does nothing to help the people. So why GameStop? Reddit is dominated by gamers. It was through gaming that we built this community. This is where the army was created. It is a universal bond that has connected us, expanding across gaps of race, gender, sexual orientation, and socio-economic status. We all have memories of getting ripped off trading in our used games, scraping together loose change and chore allowance to buy the newest game everyone was talking about. Coming home and fighting with your sibling over who got to be player-one first. For Millennials and Gen Z this collective experience united us. GameStop is where we draw the line. This is our Alamo. A war has broken out. The people are playing the game Wall Street created...and winning. Class tensions are growing, and the young people of this country are joining forces scraping together their rent money to take power back from the elite. “Hold GameStop” has become a rallying cry synonymous with “We are stronger together”.

Now institutional investors are running scared. Brokerages like Robinhood, have taken away the ability to continue buying GameStop, AMC, Nokia, and the other companies Redditors have targeted. So much for the “free-market” they speak so highly of. I guess that only applies to the rich. As a country we are seeing this this blatant abuse of power. Wall Street still thinks the rules don’t apply to them.

According the Census Bureau’s 2018 report on income and poverty, income inequality in America today is worse than it was during the French Revolution, and the working class is saying enough is enough. Jean-Jacques Rousseau said, “When the people shall have no more to eat, they will eat the rich!” And that is exactly what they are doing.

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