By Danny Wallace ‘21
David vs. Goliath. Buster Douglas vs. Mike Tyson. Logan Paul vs. Floyd Mayweather. Everybody loves a great underdog story. So, when the subreddit r/wallstreetbets decided to band together against a group of wealthy hedge fund managers short selling stocks of GameStop, the internet went into a frenzy.
In simple terms, these hedge fund managers were betting on GameStop (GME its stock symbol) stocks to drop significantly because of the belief that the company was on the verge of bankruptcy. This is where the group of scrappy faceless “redditors” come in. In an attempt to “stick it to the man” and prolong the life of the nostalgic stronghold, r/wallstreetbets called for anyone and everyone to buy stocks of GME, hoping to sabotage the managers’ master plan.
No one expected what happened next. In the span of a single week, GME rose over 500 percent, skyrocketing from $50 to a peak of $450. Previously, GME never rose above $60 per share.
When I asked about his reaction to the fiasco, Student Council President Conor Durkin said, “I always find it interesting when people’s true colors are shown. For years, these extremely affluent hedge fund managers have scorned the common man for not investing yet when they do and it hurts them, they cry. Hypocrites!”
Sadly, this victory for the common man was short-lived thanks to the questionable work of Robinhood, a financial trading company. In an attempt to curb the virality of GME, Robinhood put a cap on the amount of shares one could own.
This action immediately caused public outrage. Many thought it was the free market, not the “regulated market when the rich lose money.”
Regarding the incident, Senior Frask Cunnea said, “The whole situation with Robinhood restricting trading on GameStop is very ironic. In the old tale, Robinhood stole from the rich and gave to the poor, but this feels like the opposite.”
Avid investor Grant Matern also chimed in and said, “It is corrupt that hedge funds have manipulated the market in this way for decades. However, when the common person engages in the same activity, they call for regulation when hedge fund managers have never called for regulation in the history of the market until now.”
Although the resolution of this debacle is still being worked out, it appears as if Robinhood will not go unpunished. The company is facing a flurry of lawsuits and has lost thousands of clients because of the scandal.
Sadly, it appears that Robinhood already did enough damage, as GME will likely not bounce back. Convenient that 2021 has begun in such a 2020-esque manner.