By Zahraa Al-khalidi
A group of amateur stock investors who found each other through WallStreetBets on Reddit are gaming the stock market by driving up the value of GameStop stock by 1,900 per cent over the last three weeks. GameStop is a retail chain selling video games.
This has excited many new investors like Aaliyah Nhin who took it upon herself to be part of the new movement.
“I absolutely love the 99% for coming together and taking down these huge billionaires. It’s a whole pandemic, people are tired of the rich getting richer! We have to take a stand!’ said Nhin, “It opens my eyes up to what’s really going on and I’m happy to get into it.”
But it has not impressed traditional investors and hedge funds. As prices kept going higher and higher, the hedge funds who were betting on the stock falling by selling short, were forced to buy the shares back at a higher price costing them millions and millions of dollars.
When you’re investing in the stock market, you don’t typically think of internet trolls as a risk of investing. This is believed to be the first time that users on Reddit or another social media platform are manipulating the stock market.
There’s an argument to be made that GameStop was undervalued, but not many believe that GameStop, BlackBerry, Macy’s, AMC or any of the other companies that the Reddit crowd is promoting have the fundamentals to support such sky-high prices. At some point, it will slow down and end.
Financial analyst Julia Tam has advised to slow down during this historic time momentum.
“The newest hype of the Reddit vs wallstreet poses a significant risk for new investors who are beginners in the stock market. The group WallStreetBets is advising users to trade using options. This trading strategy can be extremely risky and volatile as investors are in a contract to buy a certain amount of shares in the future at a set price.” Said Tam “I do not advise new investors to join in on the hype but it is a good way to get their foot in the door to learn about the benefits of investing strategically”
The battle between small-time traders and hedge funds has shaken U.S. and European stock markets and moved into Asia last Thursday, with surges in several Australian companies joining a list of social-media hyped moves that have cost financial institutions billions.
“I think it is super exciting and I’m happy to see that the 99% realize how much power they hold if they all work together against the 1%” said Nhin
People manipulating the market isn’t a new thing but we’ve never had the power of social media to do it this way before and right now, history is being made.
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