The Game, stopped?: Reddit vs. Hedge Funds

Investing in stocks or day trading has been something that many people do, a few of the most popular stocks that people invest in are Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Netflix (NFLX). At the end of this past month GameStop’s stocks were starting to rise. Due to the pandemic as well as the fact that the need for video game stores are not necessary, the price of GameStop’s stock price has been decreasing. Hedge funds and investors were shortening the GamesSop stock price or betting on the company to fail so they could make money. In order to combat this, day traders on Reddit, a social news network that allowed people to have discussions, decided to band together in order to buy stocks of GameStop and caused the price of it to skyrocket from about under $20 to $350. When a stock is shorted, you have to buy the shares that were borrowed. If the price goes up for example in this case, then it doesn’t work. The price of the stock goes up and hurts these hedge funds for example, a big player, Robinhood. 

Because of the frenzy with day traders banding together, hedge funds, a big one being Robin Hood have started to restrict trading certain stocks such as AMC and GameStop. Because of this the Redditors as well as other day traders have become outraged. People are confused on whether or not the hedge fund is doing this in order to protect traders or if they have a relationship with major investment funds. No one knows how this will end and what it will lead to with new regulations and rules, which leads people like Illias Source from Springbrook High school to believe that there was no reason for Robinhood to shut down stocks for GameStop. He also went on to say that he believes that “This whole thing will die down,” and that throughout this whole situation some good came from it for example “ Some of the people on Reddit were even donating some of it (the money).” However it has allowed day traders to take the power back in a sense and play at the same level as those on wall street. Daytraders, investors, Hedge Funds and all those on Wall Street will be able to see how the story continues to unfold. 

Article by Hallie Rozario of Springbrook High School 

Photo Courtesy of Wikimedia Commons (by Phillip Pessar)