The stock price of Gamestop went to $140. Then it kept going. It hit $450, and was set to just keep on rising. Hedge funds lost so much, I've seen some reporting of up to $70 billion this week. And the thing is that the people lending the stocks get to the point where THEY start to freak out, worried that if this doesn’t stop then the people they loaned their stock to will never be able to afford to get their stocks back. So they often have an option to basically force a snap buy-back, where their shorter is required to return the stocks right friggen now, no matter how much they cost.
Which means that all this pressure builds as desperate shortsellers are forced to pay whatever it takes to get stocks right now, and this just pushes the value up even higher, as demand explodes.
Meanwhile, Redditers started to look around for other companies in a similar situation, and started investing in them, too. AMC, Nokia, Blackberry, and a whole host of other companies suddenly had their stock prices jump 200, 300, 400%. And short-selling hedge funds were on the edge of going bankrupt, basically overnight.
Then, all of a sudden, a bunch of the brokerage apps that these small investors are using, lead by one called (ironically) Robbinhood, announced a freeze on trading in these particular stocks. Or more specifically, a freeze on BUYING them.
So if you had, say, bought 50 shares at $5 and now they were worth $450, you could sell them, but you couldn’t buy any more to add to your portfolio. But the hedge funds were not held to this same rule.
It’s important to mention at this point that the following is speculation and not certain, because we don’t know for sure. And because there’s going to probably be a criminal investigation into the matter, and I don’t want to give the impression that we already are sure of the facts. But...
The price of Gamestop fell dramatically, in fact it crashed. It dropped more than 50% of its’ value almost immediately, and ended the day under $200. But unlike a normal crash, there was no mad sell-off. In fact very little stock seems to have been sold at all during that time. Because the Redditors? Flat-out refused to sell. And the only people who were able to buy it really were hedge funds. Hedge funds like Citadel, which owns Robbinhood.
So it sure LOOKS like a manufactured crash in order to save the funds from bankruptcy. Which sure SOUNDS like market manipulation. Which is uh *checks notes* illegal.
At least AOC sure thinks so.
(bet ya didn’t see that coming...Though she did tell him to piss off for being, you know, Ted Cruz, which is totally fair.)
In fact, all kinds of people are coming out of the woodwork to call this shit out, from federal politicians to billionaires (not just *shudders* Musk) to celebrities like Ja friggen Rule, all the way down to the little Redditors who as we speak are filing a massive class action against the hedge funds. People are, to put it mildly, pissed off en masse to see the “Free market” proven so blatantly and publically to be just another fucking glass ceiling when ordinary people try to actually get in on it, while the fuckers who ruined the global economy in ‘08, and keep doing so year in and year out on a smaller scale get away without any consequences.
Meanwhile, back on Reddit, the people at r/wallstreetbets have dug in their heels on what’s become an issue of class warfare. The reality of the matter is that their ability to act on the market cannot be stifled forever, and the artificial crash is just that - artificial. They are, as I write this, comforting each other and encouraging each other, spreading the word to remain undivided and to refuse to sell their shares at any price, no matter how low it goes.
Many own only one, or even a fraction of a single share, having bought in as a moral choice with whatever they could afford, though some own considerably more. They share their own paper-value losses as a matter of pride (one having lost already $14,000,000 on paper from the highs of yesterday, but refusing to sell) and bolster each others’ resolve by saying “If I can hold on, having lost so much, so can you.” They know that as long as they don’t sell, the hedge funds have nothing to buy, and they believe deeply in their ability to win the fight, literally putting their money where their mouths are.
Watch this space, it’s far from over.
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