![]() ![]() People on Wall Street only care about the rules when they're the ones getting hurt. hedge funds, stealing millions of dollars from their users to protect people who've used the stock market as a casino for decades. They're blocking the ability to trade to protect Wall St. need to have a hearing on Robinhood's market manipulation. Several Congress members also cried foul. This led to a massive backlash on social media where “the rich” were accused of manipulating the stock market in a way that kept others out. In order to avoid a stock crash, trading apps like Robinhood stopped the purchase of GameStop on their platform. While posts on social media claimed the fund had gone bankrupt, the company’s spokesperson denied the claims.Īfter hedge funds lost money, Wall Street demanded that short selling be made illegal even though it’s a practice commonly used by everyone. Melvin Capital lost 30 per cent of the $12.5 billion it invested in managing shorted stocks. Short sellers lost an estimated $23.6 billion on GameStop in this rally. Finally, last week, it caught the attention of many young online traders. This led to the share prices increasing to unwarranted levels. Though the post didn’t get any attention then, the user frequently tweeted about the retail store and the investment. In mid-2019, a Reddit user (Roaring Kitty) posted a picture showing a $53,000 investment in GameStop. Reddit users noticed hedge funds were heavily short selling the stock, particularly the $13 billion hedge fund Melvin Capital. Over the years, GameStop’s stock had been falling. A big hedge fund has a pool of investment money that gives the investor the bandwidth to invest aggressively and make complex investments for bigger payouts. These hedge funds aim to make profits by short selling on failing stocks. Hedge funds are a group of investors that are supervised by a money manager. It is the process of betting on a stock that one knows is going to fall. Short selling is a way of profiting off the price of an asset which is falling. Day trading is often used to blindside amateur traders. By day trading, one aims to make small profits that add up as they trade. Reddit users vs billion dollar hedge fundsĪt the centre of this stock trading frenzy is a battle between amateur investors and multi-billion dollar hedge funds.īut before delving into why Reddit users suddenly took an interest in GameStock, here’s a quick reckoner of key terms such as day trading, short selling and hedge funds.ĭay trading refers to buying and selling stocks of a property multiple times during the day. ThePrint explains how GameStop’s fortunes turned and why the company even drew the attention of these investors.Īlso read: GameStop mania spreads to glove makers in Asia ![]()
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