Column by: Riley Clark
Lately there has been talk about Reddit wreaking havoc on the stock market, primarily targeting GameStop and Robinhood. The stock market in its current state is reporting on nearly every news source that Redditors are to blame for this recent dip in global stock trading.
However, this is not the case. The brokers on Wall Street are taking this opportunity of vulnerability and using it as a scapegoat to mask the economic downturn since the 2008 plummet. The recent activity on Reddit however has shown that Wall Street will continually “bet” against a company, using this as leverage to get more out of a stock, otherwise known as a “short”.
Reddit has a message board that focuses on buying stocks in the stock market for people of any experience. This board known as “Wallstreetbets” teaches people that you do not need a lot of money to have good leverage in stocks.
A recent article posted on Feb. 4 by Bloomberg Businessweek stated that “the GameStop push was sort of a joke until it wasn’t”. Redditors used this social media network to purposefully bet against the GameStop share to manipulate it into seeming like a great advancement, even though this was the complete opposite. When the community came together to bet against this stock it grew rapidly in false hopes and then fell quickly. This rise and fall showed vulnerabilities in the stock market as a whole.
Robinhood, the app used to make these transactions, put its buying capabilities on hold until something was fixed with this manipulation. These actions became political when Elon Musk tweeted out “GameStonk!!” fueling the drive for people to continue to buy this stock, as he is seen as a tech idol, claims Bloomberg.
When Robinhood restricted marketing on its platform House Rep. Alexandria Ocasio-Cortez (D-N.Y.) held hearings against Robinhood, asking why users where being restricted when hedge funds are allowed to play the stock market in any way they seem fit, while retail investors are restricted from access for tampering with a single stock.
AOC tweeted “This is unacceptable”. Shorty after Robinhood cut off marketing and in response to AOC as well as its customers it was quoted by Bloomberg stating, “We didn’t want to stop people from buying stocks, and we certainly weren’t trying to help hedge funds”.
As seen today, this matter is still a growing concern, however I believe it is far from being over. Wallstreetbets has been part of a sub-reddit culture for a long time and will most likely remain for years to come. This incident was only the most recent scandal in the stock market economy and is only part of a larger revolution that will be coming in the following years.
Since 2008 the stark market has tried to employ new ways to create cash out of thin air in attempts to keep the American stocks at the top with the U.S. dollar. Creations to help the stock market succeed are crypto currencies like bitcoin, a stock that no one technically owns but can be manipulated to create more inflow of currency.
In my opinion this is just the start of an economic crisis that still has several scandals to come and will progressively get worse until something is done about some of the major hedge fund manipulators.