The stock market gained a large amount of attention on the internet after a Reddit group amassed a large following, attempting to target investment firms who were short-selling GameStop and other companies.
Reddit, specifically a subreddit named r/wallstreetbets (WSB), was where the Gamestop trend originated. Members of the community began to purchase Gamestop shares, making the value of the stocks skyrocket. Many short-selling investors lost billions of dollars due to this.
Short selling, or shorting, is when an investor borrows shares in a stock then resells them quickly, hoping to use that money to buy the shares back down the road for a lower price. Shorting is a bet made with certainty that this company will continue to lose money, and eventually file for bankruptcy.
“r/wallstreetbets is a community for making money and being amused while doing it,” reads the subreddits FAQ page. “Or, realistically, a place to come and upvote memes when your portfolio is down.”
Since the trend began, membership in the community soared to 8.5 million. The trend also spread to TikTok and other major social medias where #TOTHEMOON began. This hashtag refers to people sending stock prices higher than they had been for a very long time.
Like many internet trends, this process was fueled by memes, and overall held no long-term gains. While GameStop is still a physical retailer of video games and other products, their brick and mortar presence is becoming irrelevant due to consumers downloading games from their homes.
One of the most popular ways of investing into GameStop (GME) stocks was through Robinhood, an investing app that lets users engage in trading without having to pay transaction fees.
“I started using Robinhood because it was easy to use, and accessible at almost any place,” said Isac Mitchell, who had been using the app for about five months prior to the trend.
The stock price of GME went upwards of $300 or more at times, up significantly from their original $15 price. This went on until Robinhood cut off the ability to invest in GME stocks.
The decision to cut off investment into GME upset many users. Investors in firms could now recover their losses, while users of the app were completely shut out. Users instantly speculated Robinhood did this to protect bigger investing firms from losing more money, as they were giving the app it’s revenue.
“It’s clear market manipulation, there’s no opinion to it,” said Camden Wesseldyk, an investor who has been following the events. “The whole situation with GME just showed the general public what has been going on for years. Once the tables turn, they, the top one percent, did anything they could to stop it instantly.”
The U.S. Security and Exchange Commission (SEC) formally charged Robinhood with “misleading customers about revenue sources and failing to satisfy duty of best execution,” per a press release from SEC. Robinhood agreed to settle the charges for $65 million.