Reddit, Wall Street turmoil demystifies, defies market

Lanthorn Editorial Board

In the 2021 twist none of us expected, hedge fund managers on Wall Street have been bamboozled by Reddit, casual investment apps and Gamestop. It’s making some young investors filthy rich, some analysts shake their heads and a range of spectators confused as to what shorting a stock actually is.

The crux of the battle is between hedge fund managers and the WallStreetBets subreddit community. While hedge funds betted that Gamestop’s stock price would go down utilizing a shortsell (which makes a fund money by turning a stock on its head and pocketing the difference), Redditors instead bought a wave of stocks to shoot the price up, forcing a reversed outcome that would benefit investors and hurt hedge funds. 

WallStreetBets founder Jaime Rogozinski said on CNN that Redditors are betting on the odds of the market and simultaneously are affecting the outcome. The combination of unprecedented access to trading through apps and widespread organization creates the perfect storm to combat larger investors.

At its peak, Gamestop hit $325 on Friday, rising 400% in a week. Stocks like Nokia, AMC and Blockbuster also saw significant growth from the frenzy. This raised outrage when the app, along with many others, limited trading on stocks like Gamestop, and even sold shares for some users. 

There are commentators calling this a David versus Goliath moment, and there are others who are calling it the start of a movement. But these Redditors aren’t marching in the streets; they’re just engaging in financial trade in an attempt to turn a profit, with the added bonus of humiliating Wall Street predators.

Infamous trader Jordan Belfort nodded to the significance of the Redditors, encouraging them to act as a collective mutual fund but to pick stronger stocks. He also sided with brokerage apps like Robinhood, which had to tamper trading as a liability measure. 

Rogozinski also noted that while many are assuming this is a stock “bubble” that will pop as the price dies down, he said Reddit investors will continue to make money on the downturn as they trade option stocks. 

This combination of access, seizing opportunities and challenging predators on Wall Street might result in actual change. If anything comes out of this endeavor once volatile stocks die down, we hope to see accessibility that empowers all sorts of young, beginning traders and encourages the masses to look at the principles of our economy with newfound scrutiny.