The “war” between Reddit Users and Wall Street Hedge Funds may have caught your eye last week as several members of the site’s popular subreddit R/wallstreetbets earned portfolios in the million-dollar range on the skyrocketed GameStop stock “GME”. The company, which many are speculating is nearing its end was a favorite for a often used market strategy called “short selling”, the process of taking out a loan on shares, instantly selling the shares, and then returning the shares once they are at a lower value, thus pocketing the difference. This strategy proved costly as the Internet community discovered the strategy and bought and held the stock, driving its price upward and placing short sellers with a difficult decision to either buy up shares or face massive interest fees.
This saga reached its climax when Tesla founder Elon Musk’s, who voiced his support for the community and from wallstreetbets tweeted “Gamestonk” a popular meme amongst investors and investing communities. By the end of trading on Friday the price of GME rested at 325 a share. This is notable because the price of this stock at the start of January was a measly 17 dollars a share.
The community is currently experiencing a multitude of emotions and many intend to hold until the fabled “Gamma squeeze” a major squeeze of profits from the hedge funds. Many professionals claim the train has come and gone, and that new investors looking for a pay day should be wary. Still, many in the community claim that if they lost everything they would not mind and that their focus is on the large hedge funds losing even more money. It all makes for a highly anticipated Monday in the stock market, with a huge increase in amateur investments and worries about ripple effects in the rest of the market and the economy.
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