In late January, it came to many people’s attention that they could have gotten rich if they had invested in GameStop stocks because, almost overnight, the value of GameStop shares jumped from around $15 to a staggering peak of $347.51, where it remained for two days before dropping back and stabilizing at around $50 per share.
The trading frenzy was initiated by Reddit after seeing the company battered by hedge fund investors and Wall Street gamblers, who constantly influence the market in order to make billions of dollars. Influencing the market to perform a certain way and then betting hundreds of millions on the direction of the market has become an institutionalized method for a select few billionaires to grow their net worth, often at the expense of companies and ordinary stockholders.
GameStop was an outdated business model even before the pandemic. It sold and rented out physical games, which have become increasingly unimportant as internet speeds and connectivity have improved. When the pandemic hit, all stores took a beating, especially those that could not be considered essential. So, hedge funds bet billions of dollars against the company while encouraging sell-offs and touting store closures as the nails in GameStop’s coffin.
This instance of billionaires negatively influencing a company that many held near and dear to inflate their own wealth at the expense of ordinary people in the middle of a pandemic did not sit well with some on Reddit. They came up with a perfect scheme to rain on the hedge fund parade: use trading apps like RobinHood to buy shares in GameStop, inflate the stock’s value, make the hedge funds lose billions of dollars, sell the shares, and get rich in the process.
The scheme worked. Needless to say, it ruffled a lot of feathers.
The ensuing chaos turned the world of finance upside down. Billionaires and CEOs suddenly realized that if ordinary people could manipulate the stock market as much as they could, they would stand to lose billions. In a shocking turn of events, Wall Street investors who would never support any degree of government regulation were now demanding it. To them, ordinary people manipulating the market was dangerous, even though they have been doing it themselves for decades.
This is the only issue of its kind. The GameStop stock frenzy was very popular and widely supported by average Americans, but nearly all rich people and politicians condemned the actions of Reddit as irresponsible and dangerous. The only issue that was able to unite the two parties was one which threated bottom lines of millionaire politicians on both sides.
At best, this illustrates a disconnect between the government and the people it governs. At worst, it illustrates a cold, uncaring government that will sabotage the finances of the people it governs to grow its personal wealth.