Reddit vs. Wall Street

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Popular Reddit forum r/wallstreetbets has taken a stand against Wall Street hedge funds. The forum is a hub for individual investors who look to participate in the stock market. Members of the forum along with other like-minded investors angered by hedge funds shorting stocks, a practice of selling borrowed stocks on the hopes of buying them later for a lower price, have rallied behind the stock trading forum to invest into brands like AMC, Nokia, and most famously GameStop. GameStop’s stock prices went from as low as sub four dollars in 2020 and on the decline to peaking recently in the four hundreds costing the hedge funds dependent on lowering prices billions.

The drama was further inflamed when during GameStop’s large price spike, popular brokerage app Robinhood, among others, limited users abilities to engage with booming stocks. Hopeful investors were locked to only selling GameStop stocks and were not even allowed to see others. The connection between these apps and the hedge funds and other large traders who are losing money from the boom in stock prices has led to lawsuits and accusations of market manipulation.

Gamestop stock prices as of February 4

The result of this movement still remains unclear. Hopeful investors await a squeeze like that seen of Volkswagen, but Wall Street firms hope for a panic sell and a crash in prices. Trends for the past several days have been down for GameStop prices, but volumes of sales are too low to say the stock will crash yet. Volkswagen stocks peaked then went back down to almost their original price before hitting the squeeze.