It’s almost impossible to have missed the ongoing spectacle that started last week and continues to rage into the next. Twitter was ablaze with notable figures such as Elon Musk and AOC voicing support for the retail investors and others calling foul against Robinhood and Citadel.
A series of events that will almost certainly find its way into the annals of history, here’s what happened: A group of retail investors, mostly coming from the subreddit forum /r/wallstreetbets, invested heavily, with an emphasis on heavily, into various stocks. The primary stock in the vast majority of their portfolios was GameStop, and with the movement picking up steam, the price skyrocketed to a peak value of around $470. The price was valued below $20 at the start of the year.
It all started with one man
Keith Gill, otherwise known as DeepF–kingValue, was one of the first to invest in GameStop, as he poured thousands of dollars into the company as far back as 2019. Nearly all of Wall Street’s hedge funds were confident that GameStop would decline and took a huge short position, meaning they were betting on the company’s prices to drop. In fact, GameStop is one of the most shorted companies in the world, behind Tesla and Apple. Gill saw all of this and took notice of an opportunity: these companies were severely undervaluing GameStop.
Over the course of the next one-and-a-half years, Gill put in more money into Gamestop every month and posted his positions at the end of each one on Reddit. Many called him crazy, but he stuck with it. When the price finally started to ascend, more and more investors, especially from /r/wallstreetbets, took notice and began stockpiling their resources into the video game retailer. The result: GameStop’s price underwent a 14,300% increase.
The hedge funds who had bet on the price to decrease were suddenly looking at a tremendous loss
Wall Street scrambled to recover their positions and soon after the tremendous increase, Robinhood announced that they were blocking any retail investor from buying GameStop and several others that the Reddit community had blown up. While Robinhood allowed investors to buy a limited amount of stocks the next day, it did nothing to subside public outrage. The decision to block trades was met with intense controversy.
The situation continues to unfold
As the current situation stands, the retail investors of the world are locked in a war with Wall Street. Millions of people refuse to sell their stocks and plan to hold them for the eventual reopening of the market when many anticipate the price to rise again. The hashtag #HOLD was seen trending over the past few days.
Only time will tell what will happen. What’s going on right now is entirely unprecedented and it’s worth paying attention to as this could change the way the financial market operates forever.
Dennis Park is a freelance writer and aspiring editor who has worked as a content creator for several websites. He worked in the financial industry before making the switch over to writing and enjoys creating content for the entertainment space. Dennis enjoys soccer, reading science fiction and fantasy novels, and otherwise spends a lot of time writing. He lives in New Jersey, a hop and a skip away from New York City.