A recent spike in GameStop shares has made headlines soar. Investors from all over found their wealth in short stock purchases from trending phone applications such as Robinhood, Acorn, and even Cashapp. These are investment platforms that allow average everyday people to become Wall Street scale investors. Small time investors have found a light from above on a website known as Reddit where people discuss topics in forums that range from life hacks to “Do It Yourself” projects. One forum in particularly came from an unknown user with the screen name Wallstreetbets. This anonymous user was able to orchestrate a group of over 171,000 people to all buy stock shares at the same time, shooting the value of shares at a height of almost $500 per share, with an original price of around $125 per share.
Many of shareholders and investors will utilize a strategy know as Hedge Fund buying. This is a risky method that relies on borrowed money and investing in high-risk shares. Groups of investors will collaborate in order to take out loans and apply them into a Bull Market orientated method and hope to reap multimillion dollar profits. Anyone with a basic understanding in Economics can see where this can lead to problems and be a burden on taxpayers as the need for bailout is unavoidable. Reddit users decided to utilize WallStreet’s own tactics against them, banning together rocketing prices of shares and then selling out for personal gains.
This has developed into a frenzy of panic selling and investing applications completely shutting off availability to certain company shares, which is considered “Market Manipulation”. Consecutive companies such as AMC Entertainment which had an original share price of $3 last week rose too just under $25 per share. This helped AMC as they were experiencing devastating blows due to the COVID restrictions. AMC Entertainment was able to recover some of their losses due to the closing of every theater in the nation, but stockholders were not to please by this event.
The stock market is continuing to see collaborated share spikes by users across the world and many are wondering the extent this trend will take. These operations create an incredible number of gains and then completely bottom out. Wall Street asset managers are seeing the worst of business operations since the last stock market crash. Bailouts of companies may be seen in our near future, but how far should we go to help these companies who wanted to utilize these funds for personal gains. Future issues have yet to be resolved as many other corporations are soaring from this trend, the stock market has shifted in cost as well as Fortune 500 rankings. This may be the beginning of yet another regulated business process in the making.
Written by: Charlie Alvitre