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How Redditors devastated Wall Street hedge funds by buying GameStop stock – with the 15 funniest responses

Oonagh Keating. Updated January 28th, 2021

When Kpop fans swamped social media with pictures of their favourite idols to subvert the anti-Black Lives Matter hashtag, #WhiteLivesMatter, it was a clear signal that ordinary people have a lot of power on the internet, as long as they organise.

The follow-up to that is playing out over on Reddit, where a group of small dabblers in the stock market have already hit some huge hedge funds right where it hurts – in the bank account.

THE POTTED EXPLANATION

A gaming retail chain in the US, GameStop – the kind of place where people trade in old games for a few pence – has been struggling in the aftermath of both the pandemic and the move towards online selling, leaving its share prices perilously low, and leading to job losses.

So far, so normal.

This is where it turns into a Cohen Brothers plot.

Some Wall Street hedge funds – that’s just dynamic investment teams, to the rest of us – have been shorting on the GameStop stock.

Shorting is ‘borrowing’ stock, selling the borrowed stock with a reasonable expectation of the price dropping enough that you can then buy it back more cheaply and return it to its original owner, pocketing the profit.

Risky, but it works enough of the time to make it a common practice.

Enter stage left, r/Wallstreetbets – a Reddit forum of small-time stock investors, including high school students, pensioners and low-paid workers. The GameStop stock became a bit of a project for them, with members buying up the stock, thereby raising the value and forcing hedge funds to buy back the shorted stock at a higher price, pushing some towards a financial cliff edge.

Got it?

tl;dr Redditors are screwing with billionaires by buying up worthless stock, to make them lose money.

A David and Goliath story for our time.

The short squeeze, as this attack on shorting is known, is such a big deal that the White House is monitoring the situation.

Elon Musk had a more pithy reaction.

Here’s what other people have been saying about it on Twitter.

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