The Reddit users led a chaotic revolt against big Wall Street hedge funds.
Not even Karl Marx could have predicted that the class war could have erupted from a Reddit forum. Such was the case this week, when Reddit users from the forum WallStreetBets banded together to buy shares from the struggling video game retailer GameStop. The shares have since risen by more than 1,000% since the start of the year, with their stock prices rising from around $17 a share to a whopping $148 at market close on Wednesday.
AMC Entertainment is also experiencing a similar surge, with their shares jumping more than 230% on Wednesday (January 27) as #SaveAMC began to trend due to financial troubles the company was facing because of the pandemic. Bloomberg also noted a significant jump in shares of the video rental giant Blockbuster on Wednesday as well.
Somewhat of a revolution, the users in the forum seemed to etch out their plans on Reddit nearly four months ago under the title "Bankrupting Institutional Investors for Dummies, ft Gamestop." Reddit users realized they could make a profit if they banded together to screw over the short-seller investors who depend on quickly buying the shares they don't actually own to avoid more losses.
A user in the WallStreetBets forum explained yesterday, "Hedge fund managers live in the past, and continue to look down upon the retail investors. They truly believe that we, the average retail investors, don't know anything about finances or the market (which may be true), and we're just gambling our money away."
The group, which was briefly made private on Wednesday night as it topped 3 million members after the trading frenzy, was also banned from the Discord instant-messaging app. Even Elon Musk spoke out about the suppression, suggesting that even the Discord app is siding with corporations. Of course, the jokes on social media have been pretty funny as well.
TD Ameritrade said it is setting restrictions on trades involving GameStop and AMC, stating, "In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC and other securities. We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors."
We'll keep you updated on WallStreetBets vs. Wall Street as more developments occur.