In any reading, the most unusual thing about Wall Street’s being challenged by a rowdy band of Redditors is that it took so long to happen. There really is a “revenge of the nerds” angle here, but there are also plenty of rich investors cashing in on GameStop alongside the line cooks and high school students.) One of the hedge funds that had shorted GameStop’s stock, Melvin Capital, had to get a $2.75 billion bailout from two other investors after it was hammered with huge losses.ĭepending on whom you ask, the GameStop saga is either a cautionary story about a bunch of reckless nerds destabilizing the stock market for laughs in a way that is likely to backfire on them spectacularly, or a David-and-Goliath morality tale about a fearless band of retail investors cleverly putting one over on corrupt financial elites. The scheme’s originator, whose Reddit user name is unprintable in a family paper, claims to have turned an initial investment of $50,000 into a windfall of more than $40 million. Within two days, GameStop was the most heavily traded stock in the world, Elon Musk and Representative Alexandria Ocasio-Cortez got behind the revolt, and r/WallStreetBets users were posting screenshots of their suddenly inflated account balances. The simplest explanation for what happened is that a bunch of hyper-online mischief-makers in Reddit’s r/WallStreetBets forum - a clan of self-described degenerates with user names like “dumbledoreRothIRA” and “Coldcutcombo69” - decided it would be funny and righteous (and maybe even profitable, though that part was less important) to execute a “short squeeze” by pushing up the price of GameStop’s stock, entrapping the big-money hedge funds that had bet against it. This week, the biggest story in the financial markets is the absurdist, pretty-sure-I-hallucinated-it drama involving GameStop, a struggling video-game retailer that became the rope in a high-stakes tug of war between Wall Street suits and a crusading internet mob. To hear more audio stories from publishers like The New York Times, download Audm for iPhone or Android.
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