Under The Hedge

Last April US video game retailer Gamestop (think GAME or Gamestation, lest we forget) had shares going at $3.25 each. On the 27^th of January the price for a share at close was $347.50, that’s a 10,000% plus increase of price. This insane increase of share price in a company which has seen many of its contemporaries go bust or come close (Blockbuster, Gamestation and HMV) stems from the wonderful world of Reddit.

Reddit, or the ‘front page of the internet’ as it dubs itself can be daunting upon first visit and its power and sense of community may still be unknown to those more acquainted with the sight. Reddit is a forum style website that collates societal news and creates community discussion in what are called “subreddits”. These subreddits are basically discussion websites within the larger website. One can follow and join certain subreddits according to one’s interests. Looking at someone’s list of communities of which they are a part of on Reddit can tell you a lot about any given person. For example, the only subreddits that I am a member of are to do with vexillology (study of flags) and maps, which for anyone who knows anything about me is me in a nutshell.

To look at what happened in the US Stock Market over the past couple of days we need to look at the subreddit called ‘wallstreetbets’. This is a community that monitors the stock market in and, as a community, pool money together and tries to out-gamble the traditional stockbrokers and hedge funds. In a way, this subreddit is the home of capitalist vigilantism. To the naked eye the low price of shares in Gamestop might just look like a company on its way out but the truth is that it’s because of hedge funds ‘shorting the stock’. Now, to explain that phrase I feel like I need a celebrity to break the fourth wall and easily explain it á lá Margot Robbie in a bubble bath in The Big Short. Simply put shorting stock is the complete opposite of how you traditionally think stock buying works. Rather than buying low and selling high shorting involves selling stock high and buying low, in that order. This is done by ‘borrowing’ stocks to sell at a high price and due to the market seeing these stocks as being sold the price drops, at which point the person shorting the stock is obligated to buy the stock.

Many hedge fund managers and other Wall Street elites are calling foul and claiming that this sort of mob-like economic vigilantism is “market manipulation”. Now some of you may be saying “well isn’t that just hypocritical of them?” and you would be right. It is pure unadulterated hypocrisy.

Since the close of trading on the 27^th and the loss of over $5 billion by multiple hedge funds who shorted the stock many online trading platforms have restricted trading of Gamestop stock. Which is the equivalent of turning off your games console because you’re losing to your younger cousin who has never played the game before. One online trading platform, aptly named Robinhood, has ceased trading in Gamestop stocks altogether which could mean that if the price of the stock rebounds back to its low price and its expected shorted price then many of the redditors who bought in through the app could lose a lot more money. Which, as we all know is exactly what The Robin Hood would’ve wanted, people trying to steal from the rich to give to the poor only to be told “no you can’t do that, this is our game. Give the money back, actually, give the rich more money!”

Through this wonderful community of economic vigilantes and revolutionaries many people have been doing something that the big bank managers wouldn’t do with their money: use it for good. Whilst a lot of people would see this as an opportunity to treat themselves to a nice new material good many have seen this as an opportunity to make a difference, further the natural community spirit that we as humans have; with people spending their earnings on healthcare for others and charitable donations to causes such as homelessness and refugees.

There will be a lot of words that will be written about this topic in the coming days or weeks, it’ll be interesting to take stock of what happens (pun intended). Will Wall Street continue to try and ring fence the stock market? Will this the be the end of a free market economy within America? Will the UK see a similar sort of economic revolution? Only time will tell.