By Dylan Harrison
There has been an online movement of retail investors taking back power from wealthy hedge fund managers. It all started with a Reddit group called wallstreetbets encouraging everyday people to buy stocks that Wall Street investors were betting would fail.
The value of a stock is determined by speculative value or whether it will go up or down. Wall Street investors were betting that struggling video game retailer GameStop would be going out of business, and therefore bet against the stock or “shorted it.” This means that they borrowed stock from GME stockholders. They then are able to sell the shares but have to pay back the stockholders at a later date. If the value of the stock is 100 dollars when they sell it and it goes down to 30, they pay back the stockholder 30 dollars and make a 70 dollar profit.
What happened is when so many investors began buying the stock, the price went up which caused what is called a “short squeeze.” And Wall Street investors were forced to buy back the stock that they sold at a higher price, causing them to lose money. Them buying back the stock after they sold it also further increases the upward trajectory of the stock.
Many investors have since sold their shares. The all time high of GME was $483.00 at the time of this writing it has dropped to $50.36. Some of the people who sold their shares went on to buy their parents homes or buy themselves cars. One man even bought iPads and donated them to the Boys and Girls Club of America.
