By: Kenyan Carter | News Editor
Users on the Reddit website made a collective investment that left Wall Street and the internet in a frenzy. Members of the forum WallStreetsBets, which hosts 3.8 million members, calculated the purchase of thousands of stocks into the retail chain GameStop.
Wall Street investors have been betting on GameStop failing for years, and a good reason. The company had been facing falling revenues with increased digital gaming and smaller foot traffic due to Covid. According to Cnet, “GameStop closed 462 stores in 2020, with plans to shutter more than 1,000 stores total by March.” Wall Street investors began betting against GameStop stock through a process called short selling. The retailer became one of the most heavily-bet-against stocks on the market until the internet stepped in.
Redditors noticed how much Wall Street investors had bet against the company and began buying up shares, pushing up GameStop‘s value and undermining Wall Street’s big bets. This movement went viral, and according to Cnet, “WallStreetBets sent the stock up more than 14,300%.”
This move by Redditors cost Wall Street investors a lot of money. As of Jan. 27, short sellers have lost over $5 billion bettings against GameStop this year, according to Investopedia.
This phenomenon has shown the dramatic effects of retail investing and how the internet can collectively influence our financial institutions. The movement on Reddit is continuing its collective push buying stocks to squeeze money out of Wall Street investors. They refer to them as “meme stocks.” Other “meme stocks” being invested in are different short selling companies like Blackberry, AMC, and Bed Bath and Beyond.