The WallStreetBets effect: What happened in GameStop's crazy week
How one subreddit — and a tech-friendly new way of investing — is shaping the market.
How do you push a stock up 140% in a few hours and 1,800% in a month, turning a once-crashing stock of a maybe-still-crashing company into one of the market's biggest winners? Well, you should ask r/WallStreetBets.
The WallStreetBets investors see the moves as a power grab, taking the market back from the institutional investors who have always manipulated money in secret. For a while on Wednesday, the top post of on the subreddit was titled "FOR ALL THE BIG FUCKING HEDGE FUNDS MONITORING US, THIS IS A MESSAGE FROM US TO YOU, WE FUCKING OWN YOU NOW, FUCK. YOU."
Why GameStop, though? You can't overlook the connection with gamers, but it also helped that Michael Burry — one of the investors who predicted and made a fortune from the 2008 economic crisis — has been publicly saying the company was undervalued.
GameStop's stock has had a wild week, up as high as $468 and down as low as $69 and often fluctuating wildly in the course of a couple of hours. Trading has been halted repeatedly, as the markets try to slow down the insanity, but to no avail. Insanity always immediately ensues.
The strategy worked gangbusters ... for some users. (It's easy to tell, because they love posting screenshots of their gains.) And they're not just focused on GameStop:
The biggest remaining question, other than "when will the crash come," is what the regulatory implications will be here. Alexandria Ocasio-Cortez and Ted Cruz have both called for hearings into what happened with Robinhood, and appear likely to get them. And Elizabeth Warren took the SEC to task for not being more involved: "To have a healthy stock market, you've got to have a cop on the beat," she said. "That should be the SEC." Robinhood in particular is also facing huge damage to its reputation, even if it avoids the scarier legal ramifications.
But as much as anything, the GameStop Fiasco is a remarkable display of the collective power of the internet. Enough people, with enough motivation (and enough money) can turn a dying store that sells CD-ROMs into the most exciting company on Wall Street.
Updated: This story was updated on Saturday, Jan. 30, to reflect the (many, many, many) new things happening with GameStop since the story was written.