Usually, I try to develop catchy introductions for my articles, to hopefully try and convince you to read the blog post. But, today, I can’t come up with anything that has more of an impact that these 4 words:

I LOVE THIS STORY.

To summarise what has occurred in the last week, a chain of video game shops in the US known as GameStop and listed on the New York Stock Exchange as GME has seen their stock surging due to many people on the platform Reddit, promoting the share.

Now, let’s break it down, into the incredible pieces of this story.

Firstly, how did this begin?

The sub-reddit page titled WallStreetBets is where users post their stock holdings and talk about their trades. A year ago, a user by the acronym of DFV posted a screenshot of a $50,000 investment in the stock. However, as the stock slowly began to rise, and DFV continued to post about his increasing profit, the stock price rose dramatically, driven by other users wanting a piece of the action. DFV’s initial investment of $50,000 is now worth over $47 million.

The stock has risen over 1500% in the past month and defies every law and principle in economic and day trading history. Many see this as a miracle, but when you delve into the subreddit, you begin to get a sense of the community that the subreddit has been built upon. The encouragement, enthusiasm and teamwork presented in every single post on the Reddit is a beautiful sight to see.

Secondly, what are the other motives at play?

Well, what made GameStop an even more enticing stock for many people was that many of Wall Street’s institutional investors had been betting that the stock would go down. This is called ‘shorting’ and means that if you believe a company’s shares will decrease substantially, you can place a bet on its declining fortunes. I won’t go any further on the economics of shorting, because I’ll probably get some things wrong.

However, what this meant, is that when Redditors discovered that some big Wall Street hedge funds were trying to bet on GameStop’s falling share price, they bought heaps of the shares to drive up its value, and burn the hedge fund traders. This led to the ‘short-sellers’ being squeezed and forced them to buy more shares to mitigate their losses, driving the share price even higher.

So, where to from here?

The most important thing is to acknowledge how a group of people on Reddit have baffled people worldwide. Investors are trying to find answers and stop this method from working again, and the bubble will burst eventually. But, until then, the kids will keep on winning, and be able to break through the financial burdens that stop the progress of so many youth around the world.

Everyone loves stories of the small rebel group overcoming the establishment. Or the amateur beating the professional. These are stories of hope, courage and commitment as unknown people work together to achieve a common goal. To achieve success for everyone. And to overcome the numerous hurdles that try to stop them.

I love this story because it sets the tone for 2021. This year won’t be easy, but if we all work together and maintain the hope, courage and commitment that has sustained r/WallStreetBets, we can all reap the success of our work, together.

The only difference, we control the bubble. 

7 thoughts on “GameStop: Reddit to Reality

    1. Thank you for sharing that article! It definitely provided a more economic background to the story, and I enjoyed learning more about the restrictions of ‘the bubble’. I decided to go for a more personal/community perspective on the story, primarily as I don’t have an extensive knowledge of the investing world.

      Liked by 1 person

  1. Hello Sim. The apps for small investors tried to rig the stock market back to favor the large investors by first cutting off the small investors and then when warned by the SEC they limited the small investors to only one stock buy of the effected stock. So it shows how the game has always been rigged so the large investor wins and the small investor pays for that by losing their money. Again it is a continuation of the transfer of wealth from the lower economic classes to the upper economic class, it is moving the country’s money to the wealthy at the expense of the lower incomes. Nothing will be able to be done in time to prevent the large losses that that the small investors took while their accounts were locked out and the large investors continued to devalue the stock, but lawsuits have been filed. The government is not expected to assist the small investors at all. Hugs

    Liked by 1 person

    1. Hi Scottie, thanks for your comment! Your points on small vs large investors is really interesting, and something I need to research more! I can’t really respond to it directly, but it’s definitely something I’ll consider as I continue to read and research! Although I’m supportive of idea, I do understand that this is a bubble, and I certainly don’t advocate anyone purchasing these stocks, as at this stage, that is an incredibly risky decision. I do, however, think the story highlights a great community of people, trying to work together and achieve success together.

      Liked by 1 person

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